Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

FALMOUTH CONTAINER TERMINAL BILL

Lords amendment agreed to.

LONDON TRANSPORT BILL

Lords Amendments agreed to.

SOUTH YORKSHIRE BILL [Lords]

Order for consideration, as amended, read.

To be further considered tomorrow.

Oral Answers to Questions — SOCIAL SERVICES

Psychiatric Units

Mr. Kilroy-Silk: asked the Secretary of State for Social Services which regional health authorities have not yet submitted plans to his Department for regional secure psychiatric units; and what are the reasons for the delay; and what action he now proposes to take in light of the fact the the units were advocated by his Department as a matter of national urgency in 1974.

The Under-Secretary of State for Health and Social Security (Sir George Young): Of the 14 regional health authorities only East Anglia and North-West Thames have not so far submitted proposals. The establishment of regional secure psychiatric units has proved ex-

ceptionally difficult, often because of local opposition and problems in finding a suitable site. My right hon. Friend will continue to urge authorities to press ahead with suitable plans and to deal with the setbacks which we must expect, such as those in Oxford and North-East Thames.

Mr. Kilroy-Silk: Does the Minister accept that it is a national disgrace that neither East Anglia, which has received £1.3 million, nor North-West Thames, which has received £2½ million since 1976, has yet submitted plans to his Department for the units, at a time when more than 500 mentally disordered patients in prisons are receiving inadequate care and treatment because of the absence of the regional secure units? Is he aware that those units were recommended as a matter of urgency as long ago as 1974? Will he now forget his fine words and take action to ensure that the projects get under way?

Sir G. Young: The hon. Gentleman is not being fair to either of the regional health authorities involved. North-West Thames proposes the establishment of a 30-bed unit at St. Bernard's wing in Ealing. It has completed the initial consultation process and draft outline planning documents have been drawn up. East Anglia recently issued a consultation document on its proposals to establish a 40-bed unit at St. Andrew's hospital in Norwich, and the consultation period ends on 30 September. I cannot accept that those regions have been inactive. Ministers have done all that they can to further the construction of the regional secure units.

Mr. Maxwell-Hyslop: Is my hon. Friend right about the South-West region? Is he aware that as recently as a week ago there were no plans for a regional secure unit, but only for one of two sub-regional units? Does his reply mean that within the last week he has received firm plans for the other sub-regional units?

Sir G. Young: As my hon. Friend knows, in the South-West region a 30-bed purpose-built unit is being constructed at Langdon hospital in Dawlish. The area health authority is currently considering and discussing proposals for the provision


of a secure unit in the northern part of the region. It is hoped that a second-unit will be available in the period 1983-86.

Mr. Ennals: Does the Minister accept that there is now active discussion about the proposal in East Anglia for the establishment of a secure unit, which will be part of the St. Andrew's hospital, Thorpe? Is he aware that the local authority concerned has already confirmed its support for that project but that there is concern among local residents about it? Will he and the Secretary of State do as I am seeking to do at this moment—namely, to reassure the residents that it is a vital and necessary form of psychiatric treatment that should be carried through?

Sir G. Young: It is primarily the responsibility of the regions to assure local residents about the future of facilities. Of course, Ministers will do all that they can. We welcome the support of the right hon. Gentleman in that respect.

Death Grant

2. Mr. Ioan Evans: asked the Secretary of State for Social Services if he is now in a position to make a statement about his conclusions on the death grant.

The Under-Secretary of State for Health and Social Security (Mrs. Lynda Chalker): Ministers are still actively considering this question. We are aware of the great concern felt about it by hon. Members as well as by outside bodies, and we shall make a statement as soon as we are in a position to do so.

Mr. Evans: Since the grant has not been increased since 1967, the 20 per cent. inflation this year is affecting funeral costs and the cost would now have to be more than £160 if it were to reflect its 1949 value, does the hon. Lady realise that a time of death for elderly people causes great anxiety, which could be removed if funeral expenses were met by an increased death grant? Will she deal with this matter urgently?

Mrs. Chalker: We are seeking to deal with this matter as thoroughly and urgently as possible. I am well aware of the serious concern felt by so many people, particularly the elderly. To increase the value of the death grant to

more than £160—in fact, £164—would cost an additional £75 million. That money is simply not available.

Mr. Sims: When considering this matter, will my hon. Friend take into account the special problem of parents faced with the sudden and unexpected death of a child, a contingency against which it is not possible to insure?

Mrs. Chalker: We are very well aware of the serious concern among parents with young children who lose those children and where there is no entitlement at present. That is one consideration with which we are dealing at present.

Mr. Dempsey: Cannot the Minister do something especially to ease the plight of pensioners, who depend on benefits paid by the weekly penny insurance contributions of years gone by? As those pensioners are now too old to insure themselves, could not some special provision be made to assist by increasing the death grant, particularly for the elderly in our community who are in such unfortunate circumstances?

Mrs. Chalker: We are aware that some elderly people do not qualify at all for the death grant and that there are others who qualify only for a half grant. We have that consideration very much in mind, along with all the other plans that have been put to us by various groups. I shall consider what the hon. Gentleman has said.

Mr. McCrindle: Is any progress being made by my hon. Friend with regard to the study of how practicable it would be to relate the level of the death grant to need, thereby permitting a substantially increased amount to be paid, perhaps to people on supplementary benefit, while allowing the £30 to be discontinued to many people to whom it is irrelevant?

Mrs. Chalker: My hon. Friend is quite right when he says that some people do not have difficulty in finding the money with which to pay the burial costs of their relatives. The proposal to which he has alluded is one of a large number which remain under consideration. I repeat that we shall make an announcement as soon as we can.

Home Helps

3. Mr. Sainsbury: asked the Secretary of State for Social Services what is the average cost per hour of providing a home help; and what are the highest and lowest figures.

Sir George Young: According to information published by the Chartered Institute of Public Finance and Accountancy, the average for England and Wales in 1978-79 was £1 · 75, the highest £2 · 42, and the lowest £1 · 26.

Mr. Sainsbury: Do not those figures show a surprisingly high average hourly cost for this vital domiciliary service? Does my hon. Friend agree that they may reflect too high a proportion of administration and overheads and that it might be advantageous to decentralise the service, perhaps involving the voluntary sector in its administration?

Sir G. Young: We have no plans to denationalise the home help service. However, I am sure that my hon. Friends and I would welcome experiments in the provision of home helps by the voluntary sector if it felt that it could provide the service as effectively. I hope that local authorities will consider having a contract with the voluntary sector to harness extra resources. On overheads, my own view is that that cost represents good value for money, but I hope that in their search for economies local authorities will see whether they can trim the overhead costs of this valuable service.

Mr. Carter-Jones: Even taking into account the high cost of home helps, does not the hon. Gentleman agree that it would be better to remove the supplementary barrier which has been imposed by the Government and to allow a large number of frail, elderly people to continue to receive this service, thereby keeping them out of hospitals, long-stay homes and local authority institutions?

Sir G. Young: I assume that the hon. Gentleman is referring to the possibility of recipients being charged for this service. The Department's long-standing advice to local authorities, dating from 1971, is that no charge should cause a recipient to seek supplementary benefit or an addition to supplementary benefit.

Mr. Alfred Morris: Is the Minister aware that many of the constituents of the Secretary of State are now being charged for their home helps, although they live on supplementary benefit? He has just said that it is the Government's policy that such people should not be charged for their home helps. What action is the right hon. Gentleman taking over the defiance of that policy by his own political cronies in Redbridge? Is not their decision a brutal attack on the poor?

Sir G. Young: No, because in cases of extreme hardship there is provision in the London borough of Redbridge for reassessment if such clients claim that they cannot meet the charges. I understand that in those cases the charge is totally waived.

Mobility Allowance

4. Mr. Colin Shepherd: asked the Secretary of State for Social Services if he is satisfied with the criteria for qualification for mobility allowance.

The Minister for Social Security (Mr. Reg Prentice): Mobility allowance was designed for people, primarily of working age who are unable or virtually unable to walk. I believe that existing criteria broadly meet that objective. There are a number of claims for further relaxations, but the economy does not permit any extension of scope at present.

Mr. Shepherd: Does not my right hon. Friend agree that the totally blind satisfy one of the other major underlying principles of mobility allowance, in that they cannot drive? Will he give this matter some thought so that when things improve, as they will, some action can be taken? Will he consider the possibility of a modified mobility allowance scheme to take the needs of the blind into account?

Mr. Prentice: The present definition relates to people unable to walk or virtually unable to walk, and it does not extend to particular kinds of disability. I have a great deal of sympathy with the idea of extending it to blind people, but I am under equal pressure on behalf of epileptics and people suffering from agoraphobia and other disabilities. I am afraid that in the foreseeable future there is no possibility of an extension.

Mr. Wigley: Is the right hon. Gentleman aware of the feeling that the regulations have been tightened in recent months so that many people who two or three years ago might have received mobility allowance do not now do so? Can he give an absolute assurance that there has been no tightening of the categories of people who can get mobility allowance?

Mr. Prentice: There has been absolutely no general decision to tighten the rules for mobility allowance. The decisions in each case are made by the adjudicating authorities, but there has been no guidance to them to narrow the definitions.

Mr. Tom Benyon: Does my right hon. Friend agree that the mobility allowance and other payments for the disabled are made piecemeal? Will she undertake as soon as possible to set up a review of the needs of the disabled, which could be put into action when the economy is in rather better shape?

Mr. Prentice: We have taken the view that we would rather not go into the general question of the disablement allowance at this stage, because it would simply raise expectations which could not be fulfilled. As to the mobility allowance itself, the House will be aware that when we came into office it was £10 a week and that from November it will be £14 · 50 a week—an increase of 45 per cent. That shows our particular concern with the needs of this group.

Mr. Ennals: Having complained publicly before the Select Committee that there had been too much expenditure on social security, does the right hon. Gentleman agree that this was one of the most important, humane measures carried out by the previous Government? Does he also accept that the standards of judgment across the country can vary enormously? That applies to my constituency where, first the mobility allowance was rejected and secondly, it was granted until the year 2043.

Mr. Prentice: I think that I have already answered the first part of the right hon. Gentleman's question. As to the second part, we regard this as an important allowance, which is why we have increased it more than other benefits,

and why we phased in the 60 to 65-year-old age group more quickly than the previous Government had planned to do.

Mr. Speaker: We are making slow progress, and I suggest that shorter questions should be asked.

National Health Service Staff Health Provision)

5. Mr. Pavitt: asked the Secretary of State for Social Services if he will introduce a uniform occupational health provision to cover all staff employed in the National Health Service.

The Secretary of State for Social Services (Mr. Patrick Jenkin): It is for health authorities themselves to determine what resources they will devote to occupational health services.

Mr. Pavitt: When will the Secretary of State stop subjecting nurses to delay and deferment because they are conciliatory and do not take industrial action? Negotiations on nurses' pay have been taking place for three years. Is it not a disgrace that whole areas of the country have no occupational provision for nurses in the Health Service? Will the Secretary of State take immediate action, and issue instructions or a circular to all the authorities concerned?

Mr. Jenkin: That would not be appropriate. Talks are being conducted on gradings and job descriptions for occupational health work. When those talks have been completed, and conclusions reached, I shall consider whether guidance is necessary on the scope and organisation of this service. It must be for employing health authorities to decide what proportion of their resources should be devoted to this service.

Pensions

6. Mr. Dormand: asked the Secretary of State for Social Services whether, in view of the number of representations he has received about the introduction of a 54-week year for current pensions, he will now change his policy on this matter.

16. Mr. Bowden: asked the Secretary of State for Social Services how many letters of complaint he has received from members of the public about the


date of payment of the annual increase of the state retirement pension.

Mr. Prentice: About 800 representations have been received, from individuals and organisations, about the date of this year's uprating of pensions and other social security benefits, which it is proposed shall take place in the week beginning 24 November.
As my right hon. Friend explained during the debate yesterday, he has no proposals to change this date.

Mr. Dormand: Is it not now clear that this proposal, however it is dressed up, is simply another way of saving money at the expense of those who need it most? Will the Minister confirm that this sort of Government decision is without precedent? Even at this late stage, will he change his mind about this mean trick?

Mr. Prentice: The House knows that the reason why the date was changed by one week was that it had been creeping forward in recent years. Regarding the second week's saving, the hon. Gentleman is correct to the extent that it is part of the savings that we reluctantly had to make as a contribution to the essential restraint on public expenditure this year.

Mr. Bowden: Does not my right hon. Friend accept that there are 52 weeks in a year? Next year, will he please review the pension increase on the basis of a 50-week year?

Mr. Prentice: It is a little early to say what the date will be next year. When winding up the debate last night, I gave my hon. Friend an assurance that the Social Security Act makes it essential that the updating next year will be during November—in other words, not later than the week commencing 23 November 1981.

Mr. Foulkes: By how many millions of pounds are the Government cheating pensioners? Will he confirm that it is more than the cost of the Christmas bonus, and that therefore this year the Government are asking pensioners to pay for their own Christmas bonus?

Mr. Prentice: This proposal has no connection whatever with the Christmas bonus, except in the fevered imagination of Labour Members. The saving, as it

affects retired people, will be about £65 million. Retired people would certainly be cheated if the Labour Party's policy of hyperinflation were followed.

Mr. Paul Dean: Does my right hon. Friend recall that, in speaking of the 54-week period in the House yesterday, the right hon. Member for Brent, East (Mr. Freeson) accused my right hon. Friend the Secretary of State of bad faith and of misleading the House? Have those serious and scurrilous charges yet been withdrawn?

Mr. Prentice: To my knowledge they have not been withdrawn. Any hon. Member with respect for our parliamentary traditions would expect the right hon. Member for Brent, East (Mr. Freeson) to withdraw those charges at the earliest possible opportunity.

Mr. Rooker: Will the Minister confirm that the figure of £65 million means that a married couple will lose £12.30 between now and the date of the Christmas bonus—that is more than the £10 Christmas bonus? Why should millions of pensioners be expected to put their shoulders to the wheel in that way?

Mr. Prentice: In view of my last reply, I should have thought that the hon. Gentleman was one of the best qualified to advise his right hon. and hon. Friends on the techniques of withdrawal. His arithmetic is approximately correct.

Acute Surgical Beds

7. Mr. Sims: asked the Secretary of State for Social Services how many acute surgical beds there are in the National Health Service and how many there are in the private sector.

The Minister for Health (Dr. Gerard Vaughan): During 1978 the average daily number of surgical beds available in NHS hospitals in England was just over 79,000. There are about 5,500 acute surgical and medical beds in the private sector, the majority of which are used for surgery.

Mr. Sims: Do not those figures show that private medicine has a valuable part to play in the nation's health? To what extent may some beds in the acute surgical private sector be used for the contracting out arrangements to which he referred earlier, which will obviously benefit NHS patients?

Dr. Vaughan: We believe that a greater use of private contractors will improve the care of patients and help to reduce waiting lists. Under the Labour Government, waiting lists increased every year, but under this Government they are already falling. We are determined to continue reducing the waiting lists, if necessary by the use of private contractors.

Mr. James A. Dunn: How many of the acute beds in the National Health Service are available in Merseyside, and how many will be supplied in the private sector? To my recollection, there is not a great private sector in Merseyside.

Dr. Vaughan: The hon. Gentleman is aware that there are many ways of reducing waiting lists, not simply by the use of private contractors. In December 1974, there were only 517,000 people on the waiting lists, compared with 752,000 in March 1979. That was an increase of 235,000, or 45 per cent., under the previous Government.

Mr. Heddle: Does not my hon. Friend agree that in some parts of the country the demand for acute surgical beds in the National Health Service is less than in others? Therefore, will my hon. Friend consider setting up a pilot scheme to see whether a computer bed bank could be established in the Department of Health to link a vacancy for a surgical bed in one part of the country with a patient waiting for surgery in another part of the country?

Dr. Vaughan: That is an important and interesting suggestion. There is already some exchange of beds between one part of the country and another. We shall certainly consider the suggestion further.

Mr. Moyle: When will the Minister admit that all his continual statements about putting National Health Service work out to private contractors, when health authorities think that there is no cost-effective future for it; putting private units into National Health Service hospitals, where they may be subject to staff dissatisfaction; private contractors handling 25 per cent. of health care when no one is putting up the £2,000 million to cover the scheme; are dogmatic and useless, and will merely damage morale in the National Health Service?

Dr. Vaughan: The right hon. Gentleman knows that moral in the National Health Service has never fallen faster than it fell in the years of the previous Administration. We are deeply concerned to improve the Health Service, and I believe that we are succeeding.

Disabled Persons (Facilities)

9. Mr. Newens: asked the Secretary of State for Social Services in what circumstances he is prepared to use his powers of default in the case of removal of facilities at present provided by local authorities for disabled persons.

Mr. Prentice: I will continue to consider each case put to me on its merits.

Mr. Newens: Is the Minister aware that the Essex county council's plans to introduce a 25p per day charge to the disabled for attendance at day centres and a moratorium on the provision of telephones have produced such disgust in the county that even some Conservative councillors voted against the first proposal and that members of NALGO are refusing to collect the charges? If he has the power, will he use is to ensure that the disabled are not treated in this disgraceful way? Would it not be disgraceful not to use those powers?

Mr. Prentice: No. The default power relates to individual cases, not to general policies. The hon. Gentleman has written to me about the moratorium on telephones. We are in touch with Essex about the possible implications. In general, I do not accept the hon. Gentleman's extravagant language. I hope that he will discourage members of NALGO from failing to carry out the instructions of the county council by which they are employed.

Dr. McDonald: Is the Minister aware that the mentally and physically disabled in my area are up in arms about the stinginess of Essex county council in imposing this charge for attendance at day centres? Will he reconsider his decision to refuse to direct the Supplementary Benefits Commission to reimburse those on supplementary benefit? Is he aware that these charges are the direct result of the Government's policies? They have cut the rate support grant to such an extent that Essex has had to resort to


these means and make sure that the weak and the disabled suffer most.

Mr. Prentice: Several authorities are making modest charges for day centres to reduce, often only marginally, public subsidy for those centres. I see no objection to that, provided that arrangements are made to relieve those who cannot afford to pay. I would rather see modest charges made than see those centres close down.

Mr. Alfred Morris: We have been told that Essex county council is charging some severely disabled people—mostly very poor people—for attending day centres. If some of them cannot pay the charge, is that not in effect a withdrawal of service? Does the right hon. Gentleman recall that I made public at Ebbw Vale in 1977 the legal advice available to the Department? Should he not now at least remind Essex county council of the Government's default powers?

Mr. Prentice: I think that the council is aware of them. I answered a recent question on the general subject of charging. No default order has been made either by the previous Labour Government or by this Government. Some Opposition Members and some sections of the disablement lobby have caused great agitation by trying to encourage people to make default orders. That is not happening. Fewer than half a dozen cases are in the pipeline. That shows that all the talk by Opposition Members about local authority cuts in this area is exaggerated.

Post-Operative Staff (West Yorkshire)

10. Mr. Sheerman: asked the Secretary of State for Social Services what measures he intends taking to encourage the recruitment of trained post-operative staff in West Yorkshire hospitals.

Sir George Young: I refer the hon. Member to my hon. Friend's reply to him on 17 July.

Mr. Sheerman: Is it not unsatisfactory for the Government to be so complacent when my constituents, who were taken into Leeds general infirmary for serious heart operations, are kept in a week, and then sent home because there is insufficient nursing care after the operations? Is

it not a disgrace that, at present levels of unemployment, the Government cannot ensure enough nursing care in this situation?

Sir George Young: I have looked into the case to which I think the hon. Gentleman referred—that of Mrs. Gorham. I regret that she had to be sent home from the hospital without having the operation. I understand that the consultant concerned has spoken to her recently and that the hospital will be in touch with her next month about a date for readmission. On the broader question, steps are being taken by the area health authority to recruit more nurses to try to avoid a recurrence of that problem.

Unemployment (Health Problems)

12. Mr. Skinner: asked the Secretary of State for Social Services if he will establish an urgent inquiry into the link between unemployment and heart diseases, mental stress, suicides and other health problems with particular reference to those areas in the country where unemployment has been, and is, of a very high and long lasting nature.

Mr. Patrick Jenkin: My Department is already involved in studies of health and the unemployed, including questions of their interrelation. We are also cooperating with outside researchers on a study of long-term unemployment and mortality.

Mr. Skinner: Is the Minister aware that in the United States and this country links have been established among the problems of mental stress, suicides and high unemployment in various areas? Is he further aware that recently the Northamptonshire county council's social services department drew up a report which shows such a link and that in the Northamptonshire area health authority another report is circulating showing that unemployment creates morbidity and increases mortality rates? Therefore, will he stop cutting public expenditure on social services, hospitals and unemployment to ensure that he does not make the position even worse?

Mr. Jenkin: We are aware of the research being done by Professor Brenner and by the department of applied economics at Cambridge, though some


has not yet been published. There is as yet no published work which establishes with any certainty a causative link between unemployment and ill health. If the hon. Gentleman has such evidence, I hope that he will send it to me.

Mr. Ashley: Is the Minister aware that it is nonsense to challenge the assertion by my hon. Friend the Member for Bolsover (Mr. Skinner)? Battered wives are also suffering. Would the right hon. Gentleman have given a more sympathetic response if stockbrokers and landowners were affected?

Mr. Jenkin: I appreciate the right hon. Gentleman's difficulties. I said that we were carrying out research and I asked his hon. Friend if he had any further information.

Mr. Ashley: Research is not necessary. We want action.

Mr. Jenkin: The hon. Member for Bolsover (Mr. Skinner) quoted the results of research in his area.

Mr. Ashley: Answer the question.

Mr. Orme: My hon. Friend the Member for Bolsover (Mr. Skinner) mentioned a report by Dr. Neville relating to the Northamptonshire area health authority. We understand that the report has been presented but has not yet been made public. This is of public importance. Will the Secretary of State take steps to have that report published?

Mr. Jenkin: I have not seen the report. When I do, I shall certainly consider whether it merits publication. I understand the anxieties of the House on this subject and I am anxious to be helpful. The right hon. Member for Stoke-on-Trent, South (Mr. Ashley) referred to battered wives and the NSPCC has talked about child abuse, but many other examples of those social ills have nothing to do with unemployment.

Mobility and Attendance Allowances

13. Mr. Allan Roberts: asked the Secretary of State for Social Services what changes, if any, have been made in the method by which his Department assesses people's entitlement to mobility and attendance allowances.

Mr. Prentice: Claims to mobility and attendance allowances are decided not by

the Department but by independent adjudicating authorities statutorily appointed for the purpose. There have been no general changes in their interpretation of the law relating to these allowances.

Mr. Roberts: If the Minister is correct in claiming that there have been no changes in the law or in the instructions from the Department, will he explain why many of my constituents, who previously received the attendance and mobility allowances for years, have had them withdrawn on review even though their circumstances have not altered, except perhaps to deteriorate? If he does not believe that the regulations have been altered, will he intervene to prevent this from happening? If he refuses to do so, will he not be admitting that he is party to the withdrawal of the mobility and attendance allowances?

Mr. Prentice: I can only give an opinion on a particular case if it is put to me. Even then I should have to reassert that the independent adjudicating authority makes the decision. The hon. Gentleman wrote to me recently about a constituent. In that case, the attendance allowance board looked at it again, and the allowance is now being paid.

Mr. Alexander: Does my right hon. Friend appreciate that there is a great deal of concern among the parents of mentally handicapped children about the working of the Mobility Allowance Amendment Regulations 1979? Does he further appreciate that the need for a mobility allowance by parents of teenage children with irrational and irregular walking habits is often as desperate as that of parents with children with more conventional types of handicap?

Mr. Prentice: Many teenage children receive the mobility allowance. They must meet the test that is applied to older people—namely, that they cannot walk or are virtually unable to do so. The allowance does not depend on the nature of their disability.

Mr. Snape: What proportion of applications are turned down at the first stage? Do not many deserving applicants fail to reapply or appeal once they have been turned down? Will he publish figures showing how many people initially apply, and how many receive the allowances


once they have gone through all the procedures?

Mr. Prentice: The proportion of those who receive attendance allowance on their first application is about 75 per cent. I do not have the equivalent figure for mobility allowance, but I shall look it up and let the hon. Gentleman know. All hon. Members should encourage applicants to ask for a review or a repeal of their case if they feel that they have a claim, or that their claim has been wrongly turned down.

Mr. Nicholas Winterton: I have listened carefully to my right hon. Friend's answers, but does he not agree that many sad and tragic cases come to the attention of hon. Members? Does not he further agree that those who deal with such individuals at first hand, such as general practitioners, home helps and other members of the social services departments of county councils, know best an individual's circumstances and whether he or she deserves a mobility or attendance allowance? Will he review the matter and place more importance on the opinions expressed by those who deal with such individuals at first hand?

Mr. Prentice: A general practitioner, a social worker or anyone else can submit evidence to the adjudicating authorities. That happens every day. I am sure that the evidence submitted is taken fully into account.

Artificial Insemination by Donor

14. Miss Joan Lestor: asked the Secretary of State for Social Services what statistics are kept of women becoming pregnant as a result of artificial insemination by donor provided through the National Health Service.

Dr. Vaughan: National Health Service centres providing artificial insemination by donor are not required to return information about these cases. Where numbers are small, provision of statistical information carries a risk to confidentiality and, as the hon. Lady will recognise, it is important, in the interests of the child, that these cases should be known only to the mother, her husband and the doctor concerned.

Miss Lestor: Is not the Minister aware that, in the National Health Service, this service is very haphazard and that the

availability of treatment varies according to where one lives? Does he not recognise that there has been an enormous growth of treatment by AID in the private sector? Does not the hon. Gentleman feel that that is wrong and that this service should be available particularly to married women who could then become pregnant?

Dr. Vaughan: I am aware of what the hon. Lady has said. We are concerned that the service should be available to those who want it. Nottingham university has the largest number of places, and over the past two and a half years it has dealt with 500 couples. It provides a valuable service, and we should be happy to see that service extended.

Mr. Stokes: Is my hon. Friend aware that many people consider AID to be a distasteful and dangerous concept, which should be abandoned?

Dr. Vaughan: This is a personal matter. Sometimes couples cannot produce children easily, and it is important that this service should be available. We shall ensure that the service is extended.

Retirement Pension

15. Mr. Norman Atkinson: asked the Secretary of State for Social Services if he will take steps to provide for the retirement pension to be paid as of right upon the pensioner attaining the statutory age of entitlement.

Mrs. Chalker: I assume that the hon. Gentleman has in mind the payment of the pension from pension age, whether a person has retired or not. I can only repeat what has been said on a number of occasions, that the Government are committed to phasing out the earnings rule for retirement pensioners, and the retirement condition with it, and will give effect to this commitment as soon as circumstances allow.

Mr. Atkinson: Is the Minister aware that many of us also have in mind the fact that State pensioners suffer compulsory deductions that other pensioners do not suffer? Now that the rules have been changed and it is possible for a contributor to contract in or out of the national scheme, should there not be parity between them? Will she ensure that manual workers do not, once again, get the worst of the bargain?

Mrs. Chalker: Since the Social Security Pensions Act 1975 came into being, manual workers with schemes of their own have not been treated worse than those in the State scheme. It is for their companies, and for the unions within those companies, to negotiate pension rights for their workers. If, as I suspect, the hon. Gentlieman has a detailed point in mind, I hope that he will write to me. I shall do my best to give him a full answer.

PRIME MINISTER (ENGAGEMENTS)

Q1. Mr. Freud: asked the Prime Minister if she will list her official engagements for 29 July.

The Prime Minister (Mrs. Margaret Thatcher): In addition to my duties in this House, I shall be having meetings with ministerial colleagues and others.

Mr. Freud: While the Prime Minister pursues her schedule, will she consider and explain to the House why British industry—which has its own indigenous supply of energy—should suffer because competing overseas nations can provide oil, gas, coal and electricity at lower prices? Is it wise to ask the gas industry to help to subsidise the public sector borrowing requirement by £450 million this year, at the expense of our manufacturing industry?

The Prime Minister: It is true that other countries can produce coal more cheaply than Britain. They have much easier seams to mine. Our coal is expensive. Seventy per cent. of our electricity comes from coal, so any increase in the price of coal leads directly to an increase in the price of electricity.
The arrangement made by the previous Labour Government was that the Government should buy 51 per cent. of oil from the North Sea at world prices. The previous Labour Government's policy on gas was to load high prices on to industry and to pass lower prices on to the consumer. As for the amount that the gas industry is asked to contribute to the public sector borrowing requirement, the taxpayers and citizens have to provide about £2,600 million to the nationalised industries as a whole.

Mr. Stokes: What view does my right hon. Friend take of the United Nations conference on women, which is being held in Copenhagen at a cost of £1½ million? We have sent 10 delegates to that conference. Will the conference help her and other women?

The Prime Minister: I rather think we made it before that conference took place.

Mr. McNamara: Has the right hon. Lady had an opportunity today to talk to her colleagues about the prospects for selective imports control? Does she not realise that instead of my constituents being told to travel hundreds of miles to find work, they could then find work within the constituency? Does she not accept that it would be possible to ensure that motor cars, radiators and boilers were made in my constituency, which would ensure that my constituents had jobs, and did not waste time travelling to find accommodation and jobs that do not exist?

The Prime Minister: Perhaps the hon. Gentleman is aware that there are many jobs in exports. Motor component manufacture is a particularly successful export industry. If we put up barriers against the import of motor components barriers will almost certainly be put up against the export of motor components.

Mr. Garel-Jones: During her day, will my right hon. Friend tell the Secretary of State for Industry that many of us are pleased about the Government's decision to invest in biotechnology through the NEB? Does not she agree that the Government should intervene in areas on the frontiers of technology and so create employment?

The Prime Minister: I shall certainly pass that message on to my right hon. Friend. We contribute to this new technology and industry not only through the NEB, but also, to a considerable extent, through the several research councils and through universities. We are good at this type of research and development.

Q2. Mr. Dabs: asked the Prime Minister if she will list her official engagements for 29 July.

The Prime Minister: I refer the hon. Member to the reply which I have just given.

Mr. Dubs: Is there any level of unemployment at which the Prime Minister would give a higher priority to providing jobs than she now gives to tackling inflation? What level must unemployment reach—2 million, 2½ million or 3 million?

The Prime Minister: In the long run there is no trade-off between inflation and unemployment. If we were ever to let inflation rip, we would finish up not only with higher inflation but with higher unemployment. One would do a disservice by putting unemployment immediately against the prospect of jobs later.

Mr. Crouch: Will my right hon. Friend find time today to give further consideration to university teachers' pay? As a Member for a university town, I find great concern among university teachers about reports in the press that the completion of their pay award for this year may not be ratified.

The Prime Minister: There was a meeting of the relevant committee this morning and I understand that it has adjourned until Monday.

Mr. McElhone: The combination of the record 1.9 million unemployed, 14 per cent. cuts in our aid programme and the Government's response to the Brandt report is callous, mean and shoddy. Will the Prime Minister repeat to the House today the famous words she quoted from St. Francis of Assisi?

The Prime Minister: Some of those who are most anxious for more aid to go abroad are often those who demand more import controls to stop trade coming here.

Q3. Mr. Montgomery: asked the Prime Minister if she will list her official engagements for 29 July.

The Prime Minister: I refer my hon. Friend to the reply which I gave some time ago.

Mr. Montgomery: Will my right hon. Friend find time today to read the reports of the Labour-controlled district council that plans to employ only those people who are political supporters of the Labour Party? Will she make it clear that, whatever the view of the Leader of the Opposition, she totally deplores this arrogant use of political power?

The Prime Minister: My hon. Friend must be referring to the reports of what the Walsall district council has done. If those reports are true and if jobs in the public service are to be dependent on the political colour of the applicants, that will be the end of democracy.

Dr. Edmund Marshall: May I return to the Prime Minister's advice to unemployed persons to move to other parts of the country, where she claims there are suitable job vacancies? How does she propose to provide those people with suitable and acceptable housing?

The Prime Minister: The hon. Member is slightly misconstruing my speech. I said:
Of course, frequently investment goes where there are skilled people wanting work, but there must be some mobility.
That is absolutely accurate. On the latter part of the hon. Member's supplementary, when the new Housing Bill has received the Royal Assent there will be the possibility of using vacant property which does not exist at present. There are new provisions for shorthold, and provisions to enable council tenants to take in lodgers. That will help a number of young people who want to move to other jobs.

Rev. Ian Paisley: Will the Prime Minister take time today to speak to the Secretary of State for Northern Ireland about the tragic murder of a Scottish soldier at Aughnacloy on Saturday? Is she aware that, had the Army checkpoint at Aughnacloy been manned, that soldier would not have been murdered?

The Prime Minister: Every death through terrorism or violence is a tragedy. My right hon. Friend and I, the troops in Northern Ireland and the Royal Ulster Constabulary are doing everything possible to increase the security of the people of Northern Ireland. I wish it were possible to give a 100 per cent. guarantee to the people of Northern Ireland, but it is not. In the meantime, we must continue to fight terrorism and violence wherever they occur.

Mr. Cohen: Will the Prime Minister consider visiting the Clifton training institute for the newly blind? It is the only such institute in the country and it is likely to close because of lack of Government financial help. Does the right hon.


Lady not recognise that in the past 10 years more than 1,000 people have been assisted to readjust? Will she undertake to visit the establishment and discuss with the staff the social and economic consequences of its closing? Will she then decide what the Government can do to assist?

The Prime Minister: I cannot promise the hon. Member that I shall go, but I am certain that my right hon. and hon. Friends from the Department of Health and Social Security will have heard what he said. I think that it is a tragedy if some of these places have to close—[HON. MEMBERS: "It is because of Government policies."] It is a tragedy if such places have to close when massive amounts of money are being spent on bureaucracy.

Mr. Kershaw: Will my right hon. Friend find time to congratulate those responsible for restoring full diplomatic relationships with Saudi Arabia? Is it not welcome that we should have good relations again with this traditional friend?

The Prime Minister: I am grateful to my hon. Friend. It was a matter of great regret that relations were ever broken off and we are pleased that they are now fully restored. Saudi Arabia has been a good friend of the West and has done everything possible to keep down oil prices. I hope also that our trade with Saudi Arabia will revive.

Mr. George: Is the Prime Minister aware that the ability to advance or retard careers on the basis of political affiliation is no monopoly of the Walsall Labour Party? Can the Prime Minister put her hand on her heart and say that she has never advanced or retarded anyone's political career on the basis of party loyalty?

The Prime Minister: I have consistently stood up for people on the basis of merit and merit alone. In all my years in the Department of Education and Science I was regularly condemned for doing so by Labour Members as being an elitist.

Mr. Bill Walker: During her busy day will the Prime Minister consider sending a message to President Sadat of Egypt expressing admiration for the courageous

and humane manner in which he reacted to the plight of the Shah and his family?

The Prime Minister: I shall be happy to do so. We all have great admiration for the courageous way in which President Sadat has done what he had to do.

Mr. Campbell-Savours: Will the Prime Minister take this opportunity to congratulate those athletes in Moscow who have won gold, silver and bronze medals on behalf of the British nation?

The Prime Minister: I am always happy when British athletes do well, but I must be frank with the hon. Member—I advised British athletes not to go to Moscow. I wish that they had not done so. Nevertheless, I am pleased that those who went have done so well.

Q4. Mr. Farr: asked the Prime Minister if she will list her official engagements for 29 July.

The Prime Minister: I refer my hon. Friend to the reply which I gave quite some time ago.

Mr. Farr: If my right hon. Friend has time today, will she look into the report in today's papers of the famine in Uganda? Will she try to establish a fund through the EEC for channelling EEC food surpluses to Uganda instead of to Russia where they are sold at a loss to the British taxpayer? Would it not be better to help needy Commonwealth countries, such as Uganda?

The Prime Minister: There is a terrible famine in Uganda and there are difficult circumstances for other countries in East Africa. This country has spent about £7 million trying to relieve that famine directly or through the European Economic Community. The EEC is regularly sending emergency and ordinary supplies of food to East Africa, including cereals, butter, milk powder and sugar. We urge that that is preferable to subsidising exports of surpluses to Russia. I shall convey my hon. Friend's message, and we shall do what we can to pursue the matter further.

Mr. Faulds: Will the right hon. Lady find time today to ponder the wisdom of her Saatchi and Saatchi posters displaying a few dozen hired hands posing as unemployed, when in present circum-


stances there are an impending 2 million unemployed—[Laughter.] It is a comical matter to the Tories. With an impending 2 million unemployed, were those posters not a teensy-weensy bit ill-advised?

The Prime Minister: It is not a comical matter to us. We are every bit as concerned about the level of unemployment as members of the Labour Party. However, when there was high unemployment under a Labour Government, we did not accuse them of wanting it. That is the difference. The hon. Gentleman accuses us, but we did not accuse his Government.

BUSINESS OF THE HOUSE

Ordered,

That, at this day's sitting, notwithstanding the provisions of Standing Order No. 4 (Prayers against statutory instruments, &c. (negative procedure)), the Motion relating to Industrial Tribunals may be proceeded with, though opposed, until half-past Eleven o'clock or for one and a half hours after it has been entered upon, whichever is the later.—[Mr. Newton.]

HER MAJESTY'S GOVERNMENT (OPPOSITION MOTION)

Mr. Speaker: Order. Before we embark on the debate, I tell the House that many right hon. and hon. Members have indicated that they would like to participate. It is clear that at the end of the day many hon. Members will be disappointed.

Mr. Bob Cryer (): What about right hon. Members?

Mr. Speaker: Order. They may be, but they are less likely to be. The House wants a good debate. In a motion of no confidence the Chair should be left to concentrate on the debate. Hon. Members should wait to find out whether they catch the eye of the Chair.
I have not selected any of the amendments.

Mr. David Winnick (): On a point of order, Mr. Speaker. As the Prime Minister mentioned the area that I have the honour to represent, together with my hon. Friend the Member for Walsall, South (Mr. George), is it possible for the Prime Minister to make a statement—

Mr. Speaker: Order.

Mr. Winnick: —about the matter that is said to be crippling the housing programme.

Mr. Speaker: Order. If the hon. Gentleman does that again, I shall invite him to leave the Chamber. It is unfair to continue shouting once I have asked for order. [HON. MEMBERS: "Name him."]

Mr. James Callaghan (): I beg to move,
That this House has no confidence in Her Majesty's Government whose economic and social policies are spreading mass unemployment, undermining British industry and demoralising the country.
The motion has been tabled because of the great harm that the Government's policies are causing our people. Those policies are leading British industry into even greater trouble. Above all, we reject the oft-repeated parrot cry that there is no alternative. There are alternatives, and there are better policies. The Opposition are not alone in their criticism. Although the Government will no doubt


use their majority tonight they will not be able to quieten the concern, anxiety and cries for help in many parts of industry throughout the country. Regional authorities, which have a close knowledge of what is taking place in their areas, are also much concerned. We shall probably hear echoes of those cries from the Conservative Benches, especially from hon. Gentlemen whose constituencies contain industries that are in trouble. They may not have been here had it been known at the election what policies a Conservative Government would follow. Had the Prime Minister spelt out what her policies meant, those hon. Gentlemen would not have been in their places today.
In her final broadcast before the election the Prime Minister should have said "During my first 15 months of Government nearly 600,000 more men and women will be put out of jobs; interest rates will be 4 per cent. higher; inflation will double; firms will have to cut back planned expansion and spending on new plant, machinery and modernisation; and the output of our manufacturing industries will be 8 per cent. lower, which will mean more bankrupt firms and redundancies. Oh, let me add, if any of these additionally unemployed people ask me how to find a job, I shall tell them to move." Had she said that the right hon. Lady might not have won the election, but it would have been more honest.
We warned the right hon. Lady and her Government from the outset that they were underestimating the adverse impact of their policies. She ignored us, as she ignored the trade unions. Last December, when speaking to political reporters, she is quoted as having "waxed bullish" about the economy. She said that all those astute reporters and political observers had failed to notice that retail industry was booming and employment still holding. She would not say that today. She also talked about what she termed "this blessed recession". She went on to say that she did not accept that there would be a lower rate of growth in 1980 than in 1979. She would not say that today.
She said that she would get herself a more sceptical forecaster, because she did not believe what the Chancellor's fore-

caster was telling her. We remember how scornful she was of the Chief Secretary's hair shirt, but he was closer to the truth about the impact of her policies than she was. With his words about three years of unparalleled austerity he perhaps understood what she was doing, but she did not. The country is now paying the price for that empty self-confidence of last December.
The Chancellor is not much better. On the day that he introduced his Budget and practically doubled value added tax, the Daily Mail, having said that that suggestion by Labour candidates during the election was a gross lie—although we should not take the Daily Mail as an authority—I gave the right hon. and learned Gentleman a warning as soon as he finished his speech. When he delivered that impost, the trade union conference season was in full swing and was determining the attitude of negotiators in the next wage round. I warned him that he was taking a reckless gamble. He dismissed that warning in the way that the Prime Minister dismissed our earlier warnings. He pressed ahead, and we now see the result. A year ago the Chancellor and the Chief Secretary—I do not see him—

The Chief Secretary to the Treasury (Mr. John Biffen): Here I am.

Mr. Callaghan: A year ago, the Chancellor of the Exchequer and the Chief Secretary—a good man fallen among the wets today—agreed that wages had no role in increasing the underlying rate of inflation. Those two ornaments of the Treasury Bench were still under the spell of their own rhetoric and, I suppose, of Milton Friedman's theories. They believed that all would come right at the end of the day. Even if some strong trade unions got more, the weaker unions would get less, because any excess would be taken from them by the Government strictly controlling the supply of money.
We have all seen the result of that policy. After 15 months, the rate of inflation has increased from 10 per cent. to 21 per cent. and the rate of increase in earnings has risen from 13 per cent. to 21 per cent.
I understand that it is being whispered privately to journalists that Ministers believe that they may have made a mistake in doubling VAT in the first Budget.
More than that, the Chief Secretary—I see that he is sitting on the second Bench back—is alone. The Chancellor of the Exchequer has deserted him, and has changed his tune. The dominant note in every speech that the Chancellor makes nowadays reflects not the theories that the Chief Secretary still espouses but the need for moderate wage settlements as a way to speed up the reduction of inflation. I am glad that the right hon. and learned Gentleman has discovered that. It is a pity that he did not do so earlier.
There was a further error. Last year we warned that the country would be asked to pay too high a price in lost output in order to reduce inflation if the Government tried to achieve that reduction only by a mechanistic control of the money supply and a reduction in public expenditure. We said, time after time, that the country would lose more in lower output than it would gain in lower inflation. That criticism, too, was dismissed by the Prime Minister and the Chancellor of the Exchequer. But what are the facts? Manufacturing output is 8 per cent. lower than a year ago and inflation is higher. That combination is a near-calamity for many firms.
Of course, there is complete agreement that a reduction in the level of inflation is a supreme need. Indeed, we wish that the Government had not added unnecessarily to inflation a year ago. However, there is a difference between us that I wish to emphasise. We are deeply sceptical about the Government's belief that if the level of inflation is substantially reduced—no matter at what cost to output, and we have seen the suffering there—it will lead, by some unexplained process, to a self-generating upturn in new investment and the adoption of high technology.
We believe that the Government are deluding themselves in thinking that their only responsibility is to get the level of inflation down and that thereafter market forces will take over. If the present slump continues for the three years forecast by the Chief Secretary, no one can say with any certainty what will be the state of health of British industry at the end of that time. In its most extreme form the proposition was put by the hon. Member for Macclesfield (Mr. Winterton) on the radio this morning. He said that

there was no point in curing the disease if one killed the patient in the process. I agree with him.
There is no evidence and, as far as I know, nothing in our industrial history to justify the belief that British industry will be able, or willing, to modernise during a long period of three years of recession. If the Government continue to damp down demand, British industry will emerge at the end of the three years weaker than it is today and not stronger. That is the problem that the Government face, and it is no use to anyone dodging it. There is nothing in our past to justify the belief that modernisation will take place during a long and deep recession.
The Prime Minister can surely have no misapprehension about what is happening. Even efficient firms are refraining from installing new and up-to-date capacity. Why? Because they cannot see any expansion in demand or in the home market to look forward to. Business confidence is so low that new investment in modernising plant and machinery is set to decline by 10 per cent. over the next 12 months. British industry needs a continuing high level of investment—as high a level as it achieved during the period of office of the Labour Government.
For as far as we can see ahead the Government's policy will ensure reduced output and, therefore, higher unit labour costs. We are agreed that we need a general increase in productivity. We may get a temporary, short-run burst as the recession deepens into a slump, but I firmly believe that we shall not get the consistent increase in productivity that is required to enable us to compete if, following the lowering of demand, inflation is brought to an end or reduced to decent levels.
We have discussed the issues in the past few weeks in a series of debates initiated by the Opposition. We shall discuss them again tomorrow in relation to the textile industry. I have either been present at, or have read the reports of, all the debates and they show, in speeches from both sides of the House, that firms that are efficient, have good industrial relations and are technically advanced are suffering from difficulties and are discharging workers because of the slump that has been induced by the Government's choice of policies.
More than one industry has been quoted by hon. Members in the debates to support the conclusion that it is not inefficiency or even high wages in those industries that has caused such a dramatic drop in sales. My right hon. Friend the Member for Battersea, North (Mr. Jay) put it succinctly when he said that the Government are telling us that we have to live within our means, but it is the Government themselves who are determining the size of those means. My right hon. Friend is correct. The Government's choice of policies is resulting in the present fall in demand. Therefore, the Government are limiting the size of our means.
The House should consider the position of the energy industries. The Daily Telegraph reported yesterday on the falling demand for electricity and said that it would reduce the electricity board's demand for coal. According to The Daily Telegrarph, discussions are beginning between the Central Electricity Generating Board and the National Coal Board about reducing the amount of coal that will be needed.
The CEGB has an understanding with the NCB to take 75 million tons this year. If it does not need that amount there will be serious consequences for the NCB's finances—and that will not be the end of the story. If the CEGB's finances suffer, will it be able to afford to go ahead with its programme of ordering from the power plant industry? We begin to see how these matters tie into each other and are interrelated.
We all know that without regular orders the power plant industry will be unable to compete internationally. Unless the Government are careful and change their policies we shall experience a domino effect, starting with lower demand, continuing into the CEGB's need for less coal and, through its financial difficulties, into the power plant industry's inability to compete.
What I am saying to the Prime Minister is that this country is in danger of being dragged into a downward spiral in both private as well as public industry. We are warned that the CBI survey that is to be published tomorrow will be one of the gloomiest, if not the gloomiest, since the CBI began its surveys. I read that the metal trades, textiles, timber and wood products are all experiencing a

sharp squeeze in business activity, which is eroding their longer-term plans.
Industry is now in danger of being sucked into a downward spiral of fewer orders, leading to lower output, leading to lower productivity, which will lead to less capacity to invest in new plant, machinery and modernisation. That will lead to even fewer orders and, at the end of the day, to redundancies and closures. That is the consequence of that kind of policy. It is that combination that triggered off the alarm and anger that ran through the country last week, when the number of men and women out of work was published.
The size and rapidity of the increase and the alarming statements by Ministers—the Secretary of State for Employment among them—that even higher unemployment was expected, aroused both anxiety and fear. It has not been the practice of Governments to give forecasts of unemployment, because of the uncertainties that surround it. Nevertheless, the Secretary of State, to my surprise, gave such a figure in an interview with The Sunday Times on 20 July.
That figure was given before the authoritative figures were published. However, for 1981 the hon. Gentleman is reported to have said that he believed that 1.8 million people would be out of work. The country is entitled to ask the Prime Minister whether the Secretary of State gave that figure. If he says that he did not, he will no doubt wish to take the matter up with The Sunday Times. However, if the Secretary of State did give that figure we are entitled to ask the Prime Minister, if that is a Treasury estimate, how much higher the figure will go, and for how long.
The Prime Minister told us that some short-term increase was inevitable. How long is short-term? There are already over 390,000 long-term unemployed and job vacancies have fallen for 13 successive months. What confidence does the Prime Minister have that if Government policies persist unchanged those who are now being discharged from their jobs—[Interruption.] I can understand why Conservative Members would prefer to be diverted from the serious nature of these problems. The same hon. Gentlemen are responsible, and they had better listen and consider whether they believe that


the Government are taking steps to put the situation right.
If the Government's policies persist unchanged will not those who are now being discharged, or just entering the labour market as school leavers, become the long-term unemployed and join the 390,000 that I have mentioned? We are entitled to ask the Government whether they would just sit there if the unemployment figure rose to 2V million during 1981 or 1982. Do the Government have a ceiling for unemployment before they will change their policy, and do they know what they would do in those circumstances?
I put it to the Prime Minister that she should help the country by saying what impact, in her view, given levels of inflation, money supply and earnings would have on the level of unemployment. That has been worked out. It is no use pretending that it has not. The Government have figures and estimates. Perhaps those estimates will not be wholly accurate but we have not been in this position since 1944, when the Coalition White Paper was published.
The Government have a special responsibility to give the country guidance about what they believe could be achieved given certain policies. If the Prime Minister would tell us that, the country would know what was in store. What is more, people would be able to say whether they were prepared to back the Government in accepting such policies if it meant a rise in unemployment to 2½ million or more—though I trust that will not happen.
I do not depart, and never have, from my view that an important and just means of helping to avoid inflation—though not the only means—is a linkage between increased productivity and reasonable wage settlements. That is as true today as ever it was. But if the Government hope for reasonable wage settlements they must take the people into their confidence. Even more important, the Government must convince working people that they are working in their interests. The Prime Minister has gone a long way towards disqualifying herself from being able to convince working people of that. Many people simply do not believe, or accept, that it is socially right or just to pay for reductions in rates of income tax or surtax for those

who are best off, or to embark upon a £5 billion programme to replace Polaris, when they contrast—

Mr. Patrick Cormack (): Will the right hon. Gentleman give way?

Mr. Callaghan: I am in the middle of a sentence, I shall not give way. When people contrast that with the Government's miserable penny-pinching policy of closing of old people's homes or stopping school meals, they will not accept that Government policy is justified.
The Prime Minister must address herself to the contrast that she is making in that direction. How can she justify reducing income tax in that way while at the same time asking ordinary people to accept restraints? I believe that restraint is necessary, but I also believe that we must have a Government who are determined to ensure social justice before that restraint is obtained.

Mr. Cormack: Mr. Cormack rose—

Mr. Callaghan: I shall not give way. From the estimates that we have been able to make about unemployment it is clear that the Government's monetary policy is too tight. We must have a responsible monetary policy and we can achieve that if our monetary target and our inflation levels are compatible. The Labour Government did it. We had a monetary target of between 8 per cent. and 10 per cent. and we had an inflation rate running at 10 per cent. or under. That was perfectly consistent with the growth of British industry, and that was why industry grew by 3 per cent. in 1978.
The Government cannot escape the fact that their present monetary target of between 7 per cent. and 11 per cent. with inflation running at up to 20 per cent., means, as sure as night follows day, that real output will fall, more firms will close, and more people will be put on the dole. The two are incompatible, and the Chief Secretary to the Treasury knows that if nobody else does.
The Prime Minister recently went to Swansea, where she offered advice to those who were out of work. She said that if people could not find a job they must be mobile. I am sure that she did not realise the desperate memories that such a comment would arouse. There was


genuine anger in South Wales that weekend. The Secretary of State for Wales claimed that the Prime Minister had been misunderstood and, subsequently, both he and she have lamely attempted to explain that she meant that people should move locally within South Wales. That turned the anger into mockery.
I do not know whether the right hon. Lady has any idea of the position in South Wales. If my hon. Friends and the House will allow me I shall state that position, because I know that it illustrates the position in other parts of the country. The Prime Minister was speaking in West Glamorgan, where 3,272 young people are seeking work and only 23 jobs are available. When those vacancies have been taken up there will be 3,249 young people left to make a move.
When they move across to Mid-Glamorgan they will find that there are 16 more vacancies available. They will also find 5,623 young people living locally who will snap up those 16 jobs. If the young people of West Glamorgan and Mid-Glamorgan then join forces and decide to go further east, to Gwent, they will find a further 17 jobs being offered. They will also find that another 5,121 young people are scrambling for those jobs. Altogether, in Glamorgan and Gwent over 17,000 young people are seeking jobs, but there are only 96 notified vacancies.
Now does the Prime Minister understand? Would she like to give an explanation or, better still, will she admit her error? She must know that it is not true that young people can move inside South Wales and get jobs. The Secretary of State for Wales made a fatuous suggestion. He said that they should go to rural Cardigan. He should know better.

Mr. Nick Budgen (): Will the right hon. Gentleman tell the House what he thinks the monetary target should be?

Mr. Callaghan: I shall come to that part of my speech later.
I welcome, as we all must, the new schemes for factory building announced yesterday by the Welsh Development Agency. However, they are a mere drop in the bucket compared with what is required. That is well understood.

Leaving aside the 17,000 young people scrambling for 96 vacancies, 95,000 adults are out of work in Wales. The figures are seasonally adjusted. Vacancies total 5,400. There is one vacancy for every 20 men and women who are out of work. What does the Prime Minister mean when she says that they can move locally to get jobs?
While the Government tinker with denationalisation, South Wales lives in fear that steel making will be abandoned. Now, perhaps, the Prime Minister understands why one of the leading newspapers in South Wales said that when she returned to London she left South Wales "confused and demoralised."
My hon. Friends from the North, the North-East, the North-West and Scotland can give similar accounts. Perhaps for the first time, serious unemployment has spread to Yorkshire and the prosperous Midlands. For people in such areas who wish to add to their incomes there is a new slogan—"Take a lodger." That is the new remedy. That, I suppose, will solve the problems. It is time the Government finished with the slogans and started to concentrate on the real needs of the country.
We do not accept the Chancellor of the Exchequer's decision to continue to reduce the borrowing requirement. An expansion of public expenditure is consistent with a responsible monetary policy and lower interest rates. In short, our view is that in the present situation the Government should be using budgetary and monetary instruments to stimulate demand. I wish to make that clear. Even Professor Friedman, the guru of the Conservative Government, now says that there is no necessary relationship between the size of the borrowing requirement and monetary growth. That is not a matter of theoretical debate; it is a matter of fact.
The Labour Government succeeded in supporting higher levels of public expenditure and lower interest rates because we had a balanced policy. It was balanced between monetary policy, fiscal policy and incomes policy. If the Government applied that combination they would achieve the same level of monetary supply as we had. There would be a more stable, efficient, and hard-working economy, and full employment.
Interest rates should be brought down quickly and firmly. If the Government were prepared, as they should be, to intervene in the foreign exchange markets, the exchange rate would not be as high as it is. I recognise that that would mean some rise in the money supply. We are balancing factors, let the Government understand that. I realise that it would mean some rise in the money supply, but a money target that is more closely related to the rate of inflation would allow the Government to bring interest rates down and bring the exchange rate closer to that which is justified by Britain's present economic performance. Manufacturers in the Midlands and elsewhere will be telling Government Members that, if they have not already told them. In such circumstances, investment and exports would be assisted.
The Government should put North Sea oil revenues more directly at the service of industry instead of using them to finance high levels of unemployment. The Government should reintroduce the accelerated projects scheme which the Labour Government began. That scheme generated investment in a number of industries. The figures are there if the right hon. Lady cares to turn them up. The scheme generated an investment level five or six times greater than the amount it cost the taxpayer. We are coming up to 1 August and the Government are proposing to reduce the size of assisted areas and to downgrade some of them. That is at a time when unemployment is higher than it has been since the 1930s. They should reverse that policy immediately.

Mr. Cranley Onslow (): Does the right hon. Gentleman intend to dwell on the international setting in which Britain's economy exists? Does he believe that there is any connection between international demand and his recipe of producing more goods, which might not be saleable in the world?

Mr. Callaghan: If the hon. Gentleman cares to wait, I shall come to that in the final paragraph of my speech. If hon. Members exercised patience they might learn something.
There is a great need to get potentially efficient companies and industries over the worst of the recession. Direct job subsidies should be introduced. They were used by the Labour Government and

have been continued, but they have been cut by the present Government. The Government should invest more in improving our infrastructure, such as railways, roads and ports. They should also improve our social infrastructure by building houses at a time when construction workers are idle.
Companies are cutting back on training and apprentices. My right hon. and learned Friend the Member for Aberavon (Mr. Morris) gave a classic example of the British Steel Corporation cutting apprenticeships at Port Talbot from 65 or 70 a year to 35. Everybody says that we need skilled labour, but only lip service is paid to it. The British Steel Corporation has said that it is ready to continue training the full number of apprentices, but the cost is £150,000. The corporation has asked whether the Government will find that money, but the Government would sooner be penny-wise, pound-foolish and cut by half the number of apprentices being trained. The Government must increase training, not only to help the unemployed but to improve the chances of rising productivity.
The Manpower Services Commission budget has been cut. What defence is there for that? What madness is it? Some industrial training boards are said to be under threat. The Government wish to put additional responsibility for training on companies at a time when they can least afford it. If world growth and trade are to recover it will require a change in attitude by the Prime Minister every bit as great as that called for by the failings of her domestic policies.
One of the most depressing features about the Venice summit was the failure—particularly by the Prime Minister, because of the severity of the slump in Britain—to fight against the synchronised downturn of all the industrialised countries.
If world trade does not expand, inevitably countries will drift into a protectionist war. We believe that it is essential that world trade should expand. Until the leaders of the world can agree on a viable plan we in Britain will need to safeguard our industrial position, provided that we can combine that with trade and aid for the developing world. It is necessary to introduce some temporary measure of


protection for some of our efficient industries. Such measures in the case of industries that need modernisation should be combined with viable plans for modernisation for the temporary period.
There should be a further summit—a successor to the Venice summit—at which the Prime Minister can battle for British and world trade.
To sum up, the Government must not attempt to solve the nation's problems on the backs of 2½ million unemployed men and women. Any improvement that they get will be bought at too high a price. I have put forward a package of measures that would stimulate demand. That is far better than the dreary hopelessness to which Conservative Members will be confined during the forthcoming months. Measures such as those that I have put forward and others that I have outlined should be adopted. We shall continue to press them upon the Government. We shall take our proposals to the country on every occasion, so that public opinion, in the end, will force the Government to change their stance or, better still, to go.

The Prime Minister (Mrs. Margaret Thatcher): I have taken part in many censure debates over the last 20 years. With but a single exception, in which I was particularly involved, as was the right hon. Member for Cardiff, South-East (Mr. Callaghan), their outcome was a foregone conclusion. Nevertheless, I think that for the most part they were occasions when the parties of opposition, or some of them, were genuinely convinced that the Government of the day were grievously in error. I do not doubt the sincerity of the Opposition this afternoon. My task is to explain why I believe that the change of direction which they urge upon us would be fundamentally mistaken. Having listened to the right hon. Gentleman, it seems to me that what he wants is more of everything except financial responsibility.
Every one of us on the Government side of the House is as concerned as the right hon. Gentleman about rising unemployment. [HON. MEMBERS: "Rubbish."] We recognise, as much as any on the Opposition Benches, the heavy toll of disappointment and frustration represented by every person on the unemployment

register. We also believe that it is a cruel deception to pretend to the unemployed that it is within the capacity of politicians, on their own, to create employment that will last, or to avert indefinitely the disappearance of a job whose market has gone. What is more, protestations from the Opposition Benches would carry more weight if the Opposition's own record in office had been better. They know, and the right hon. Gentleman knows, that under the Labour Government unemployment doubled and that, at the peak in 1977, there were 1 million more men and women out of work than when they took office.
What did the right hon. Gentleman say then? He told us that it did not help to pretend that there were
immediate and quick solutions."—[Official Report, 3 March 1977; Vol. 927, c. 607.]
In 1978 he said that
to suggest that the unemployment that is sweeping the Western world is due to the policies of Her Majesty's Government
was
sheer party politics."—[Official Report, 24 January, 1978; Vol. 942, c. 1174.]
The tune has changed a little since then. Today, the whole centrepiece of the right hon. Gentleman's approach is the immediate reflation of the economy, which he would achieve mainly by increased public spending. He could finance that extra spending in one of only three ways. He could tax more, borrow more or print more, or, to judge by previous form, a combination of all three. The right hon. Gentleman admitted, when he was in government, that earnings were already too heavily taxed. He even took some inadequate steps towards reducing that burden. It took a Conservative Government to make the real breakthrough in cutting direct taxation and allowing people to keep more of the money they earned. We hope to go further in this direction.
Perhaps, rather than tax more, the right hon. Gentleman would advocate that we should relax our fiscal policy, which he did, and borrow more. I believe that another £3 billion has been mentioned. At a time when the demand for industrial and commercial credit is still high, for the Government to borrow still more could only have the effect of driving up interest rates. In our view, that would be one of the most damaging things that


could happen to the private sector and to the prospects for jobs.
The outlook for interest rates depends crucially on curbing public spending and borrowing, a course to which the Government are already committed. The Government are determined to bring interest rates down further as soon as it is prudent to do so. [HON. MEMBERS: When?] As soon as it is prudent to do so.
The only other way of spending more money would be to print more by relaxing the monetary targets. That is what the right hon. Gentleman advocated. He is telling the House that the Government's target range of 7 to 11 per cent. for this year should be increased. In doing so, he is abandoning any pretence that the attack on inflation is his first priority.
There are those who take the view that we should give up the aim of reducing inflation and simply adjust to the current rate. It is argued that this would avoid the formidable transitional problems we inevitably face. That was the right hon. Gentleman's argument. The history of the past 20 years has shown that attempts to adjust to inflation have merely led to ever-increasing inflation rates. Each time commodity prices or oil prices move upwards, we have been ratcheted to a new, higher level of inflation. Each time, it is argued, as the right hon. Gentleman argued today, that this should be accommodated because the price of preventing it would be too great.
The Government are determined to reverse this process. They are determined to establish credibility for sound financial management and to resist attempts to argue for more adjustment. Accommodating inflation does not mean stable inflation at a higher level. It inevitably means accelerating inflation leading to hyper-inflation. That would destroy confidence in our society and be a cheat and fraud on the savings of the people, particularly the elderly.

Mr. Robert Sheldon (): Is the Prime Minister aware that responsible financial management led Sir Winston Churchill to return to the gold standard and that he regarded this as the greatest mistake of his life because it increased the exchange rate, led to unemployment and led to the destruction of industry?

The Prime Minister: If the right hon. Gentleman has to go back that far, he really is in difficulty. I should like to give him a reply relating to a more modern and up-to-date time. The right hon. Gentleman the Leader of the Opposition—perhaps, the right hon. Gentleman supports this—suggests that we stimulate demand by printing more money.

Mr. David Stoddart (): No.

The Prime Minister: Of course he does. That is exactly what he is doing. The answer to everything that the right hon. Gentleman said was given by his right hon. Friend the former Chancellor of the Exchequer, who said in 1977:
If we tried to stimulate demand by printing money to give away at home, then we would run slap up against the problems that nearly knocked us off our feet last year (1976). We would increase the gap between what the Government spend and get in revenue to a size which we could not finance without raising interest rates to a level which choked off our industrial revival. So the only result would be to get deeper into the red, to send the pound plummeting and prices and unemployment rocketing.
That is true. That is exactly what the Leader of the Opposition was advocating today.
There are those who say that we should accommodate inflation because they are not prepared to fight it. But there are also those who, unlike the right hon. Gentleman, say that although our strategy is right we are not applying it vigorously enough, that unless we reduce public spending faster, the effect of the monetary policies will bear too heavily on the private wealth-creating sector and on the very firms upon which we count to provide growth and jobs for the future. I understand and share these anxieties. It is, indeed, a danger, but the Government believe that, bearing in mind the many problems that we face, the pace of change is as fast as circumstances will allow.
It has been particularly difficult to reduce public spending when we have had to meet the cost of the Clegg and other comparability awards. That catching-up process—which follows the inevitable collapse of incomes policies—is now nearly over. The Government are making strenuous efforts to keep public sector pay settlements within what the nation can afford. We owe it to the private sector, and especially to the small businesses.
If we want more money in the private sector we can have that only while we are fighting inflation by reducing the public sector. That is what the Leader of the Opposition will not face.

Mr. Dennis Skinner (): Is the Prime Minister aware that there is another area where public spending is increasing very rapidly? Does she agree with the words of the Minister of Agriculture, Fisheries and Food, at Warwick a few weeks ago, when he told the Tory Reform Group that of a public sector borrowing requirement of £9,000 million per annum, £7,000 million went to finance the dole queue? If she does not, will she explain what she is to do with her right hon. Friend?

The Prime Minister: First, I do not think that my right hon. Friend said that £7,000 million of the £9,000 million public sector borrowing requirement—[HON. MEMBERS: "He did."]—was needed to finance the dole queue. On the whole, unemployment benefit is financed out of the national insurance fund. If the hon. Member wants precise figures he must ask my right hon. and learned Friend the Chancellor of the Exchequer for them. However, neither the Leader of the Opposition nor the hon. Member for Bolsover (Mr. Skinner) can ignore the fact that if we are to continue to fight inflation we cannot have increasing public spending and more resources in the private sector. That is the conundrum that we have to try to solve.
The right hon. Gentleman also suggested that we should by one means or another bring down the exchange rate to help make British industry more competitive. I agree that a high exchange rate is making life difficult for some of our industries, but I must tell him that he greatly overestimates our capacity to influence or resist the markets.
Sterling has strengthened recently because we have North Sea oil and because investors overseas believe that our economic policies are right, that they will succeed, and that under a Tory Government Britain is worth investing in. I agree with them. I also concede that if overseas investors thought that we had thrown in the sponge in the fight against domestic inflation they would want to get out of our currency and it would

fall. But is that really what the Opposition would advocate, bearing in mind what happened in 1976, when, under the right hon. Gentleman, the pound plummeted to $1·56? If it is, our answer must be "No".
The right hon. Gentleman and his supporters have suggested the widespread imposition of import controls. We certainly believe in strong and vigorous action through the EEC against dumped or highly subsidised imports. At present the Community is actively pursuing complaints about dumping of petrochemicals and synthetic fibres. Although we are concerned about the level of import penetration, which increased considerably under the right hon. Gentleman, particularly in cars, we do not feel that general import controls really deal with the problem, and they could have very damaging effects on exports and on our industry generally.
If trade is two-way, barriers also work two ways, and in this country there are a lot of jobs in exports. Indeed, one-third of our manufacturing output goes into exports. We export a greater proportion of our GNP than all our major competitors—double that of Japan and four times that of the United States. Moreover, the right hon. Gentleman ignores the fact that import controls would raise prices to the consumer and would shelter inefficient industries.
We hear complaints about cheap imports from the low-wage developing countries, but last year we had a surplus of £2·1 billion in manufactures with them. We hear complaints about imports from the newly industrialised countries such as Korea, Taiwan and Mexico, but our surplus on manufactures with them last year was £1·2 billion. We hear complaints about imports from Europe, and yet nine out of 10 of our top export markets are European countries, with West Germany our best export market. Moreover, international companies have set up here on the basis that their products would have free access to Europe, for example Ford engines at Bridgend. Our industries must compete by the efficiency of both management and work force. It is no good demonstrating to keep yesterday's jobs. We shall not succeed. We can and do offer practical help to mitigate the effects of change,


but we cannot resist it. We should foresee it, and we should adapt to new technology and new industry.
I see that the Labour Party is making another attempt to convince the country that it can make something saleable out of its special relationship with the trade unions. I even hear the magic words "social contract" being bandied around. But I doubt whether the country will be caught that way again. Let us remember what the social contract was designed to do. The Labour manifesto for October 1974 boldly said:
The Social Contract is the trade unions' free acknowledgement that they have other loyalties—to the members of other unions, too, to pensioners, to the lower-paid, to invalids, to the community as a whole".
Those are very fine sentiments. Four years and several stages of incomes policy later, we saw industrial disruption in schools, hospitals and old people's homes, and even in the ambulance service, and in some areas the bereaved were prevented from burying their dead. The truth is that the right hon. Gentleman was kept in power not because of support from the trade unions—who finally turned on him—but by his liaison with the Leader of the Liberal Party, without whom the Labour Government would have collapsed in 1977. That was the contract that really mattered.
I come now to the main part of the right hon. Gentleman's speech, which was concerned with unemployment. We are all concerned about the rising trend of unemployment, especially among young people. We are as concerned about unemployment having risen by some 600,000 under our Government as Labour Members were concerned at its having risen by 1 million under their Government.

Mr. Alexander W. Lyon (): Mr. Alexander W. Lyon (York) rose—

The Prime Minister: We care just as much as Labour Members—

Mr. Lyon: Mr. Lyon rose—

Mr. Speaker: Order. The Prime Minister is not giving way and therefore the hon. Gentleman must sit down.

The Prime Minister: I am sorry, Mr. Speaker, I did not see the hon. Gentleman.

Mr. Lyon: Is it not right that the fastest rise in unemployment at the moment is among the long-term unemployed—those unemployed for more than a year—and that many of these people are over 50? Does the right hon. Lady agree that it is in this area that spending is being cut? Surely this is an area to which the Government should be giving some attention in seeking to ameliorate the impact of unemployment.

The Prime Minister: We are most concerned about the rise in the numbers of school leavers coming on to the register. We shall concentrate our efforts on them. The fastest rise in unemployment between May and July of a following year was under a Labour Government, when, between May 1975 and July 1976, unemployment rose by 613,000, which is more than it has risen under this Government. At the same time, inflation reached 26.9 per cent. and the exchange rate 1.78 dollars. Whatever our record is, it is not as bad as that.
The Government are just as concerned as the Opposition about the sheer waste and lost opportunities that unemployment entails. Our differences arise in terms of the causes and the cure. What we had from the right hon. Gentleman was an assortment of palliatives that in the long run would only worsen the situation. He would like us to take the country down the same path as that taken by the last two Labour Governments. Yet look what happened to jobs under those Governments. Under the first one, when the right hon. Gentleman was Chancellor, between 1964 and 1970 the number of jobs in the economy fell by over 300,000. That was under Labour. Between 1974 and 1979 the number was virtually static. This contrasts starkly with what happened under Tory Governments. In 1964 there were nearly 2 million more jobs than in 1951, and in 1974 there were 300,000 more jobs than in 1970. These figures speak for themselves.
Let us consider the causes of the disturbingly high level of unemployment that now faces us. I believe that there are four. The first is the simple fact that more and more people have been coming on to the labour market. The increase in the number of school leavers is making the problem of youth unemployment especially acute. Secondly,


the recent tripling of oil prices has triggered off a world recession similar to that of 1974–75. There is no way that we can escape the effects of this recession. Unpalatable though it may seem to the Opposition, all the industrialised countries have now learnt that the idea of spending their way out of recession is no more an option for them than it is for us.
The third reason for our rising unemployment is our failure to adapt to changing conditions and changing patterns of trade. In the process we have lost more and more jobs to other countries. It is a sad fact that wherever the trade unions have tried to protect jobs and living standards by industrial action and restrictive practices they have all to often thrown those jobs—or someone else's jobs—away.
Let us take General Motors, for example, which, because of its experience with strikes at Ellesmere Port, is expanding in Europe rather than in Britain. Let us take the closure of British Leyland's Speke factory because employees refused revised manning levels. Let us take the incredible delays in the construction of power stations. While preserving a few jobs in one industry, the cost has been higher electricity prices and many fewer jobs in other industries.
Other countries are suffering from structural unemployment, but ours is worse because we are slower to respond to change. The Government are trying to encourage change. That is why we have freed industry from controls.
The Labour Party wants to go back to controls and its beloved planning agreements. I understand that the right hon. Member for Chesterfield (Mr. Varley) is particularly attached to them. He once managed to negotiate one. The Labour Party wants an ossified economy. Why else does the right hon. Gentleman berate us for suggesting that we need greater mobility?
With continuing skill shortages and a much higher ratio of vacancies to unemployed in some parts of the country than others, a greater willingness to move must help. [HON. MEMBERS: "Where?"] The distribution of vacancies around the country is 45 per cent. in the South-East and 55 per cent. over the rest of the

country. I would think more of what the right hon. Gentleman said and what the Opposition are now shouting if it were not for the fact that under Labour, unemployment in Wales rose by 208 per cent.
A fourth and much more immediate cause of unemployment is the recent level of pay settlements, which have not been matched by productivity. Trade unions have been demanding, and too often getting, for their members increases that their employers could not afford.
Pay in the United Kingdom has been going up twice as fast as that of our competitors. With the strong pound, this has meant a massive loss of competitiveness.

Mr. Dick Douglas (): Will the right hon. Lady tell the House in which areas of the country there are vacancies, and in what skills?

The Prime Minister: I did that a moment ago, when I gave the percentages. Do not the Opposition realise that each month 250,000 people go off the unemployment register? They find jobs. It is not a static position. At the moment there are comparatively few vacancies—126,000—but that figure has not touched bottom. It was lower under the last Labour Government. We must multiply by about three to get the actual number of vacancies. As the hon. Gentleman goes over the situations vacant columns in many local newspapers throughout the country, as he has, he will find many vacancies.
A fourth and much more immediate cause of unemployment is that the recent levels of pay settlements have not been matched by productivity. By paying themselves more than they have earned, people have put their own jobs at risk. When they have passed it on in higher prices they have also put the jobs of others at risk, and by taking for themselves the money that otherwise would have been available for new jobs they have worsened the prospects for school leavers.

Mr. Jack Ashley (): Mr. Jack Ashley (Stoke-on-Trent, South) rose—

The Prime Minister: I must carry on now.
Too much pay means too few jobs. We have set out our monetary targets for several years ahead, so that management and unions may negotiate against that background. If earnings exceed those targets, unemployment will rise. If earnings are well within that range, there will be room for growth and more people will be at work. No one can opt out of this responsibility.
Unlike the right hon. Gentleman after his reconversion to Socialist economics, we can make no pretence that Government alone can control the level of employment in a free society, but we do regard it as a duty of the Government to facilitate change and to alleviate its effects.
We are spending more on training measures, especially for young people, than the last Government spent. My right hon. Friend has rightly pledged that by Easter of next year every school leaver will have been offered a job or a training place under the youth opportunities programme. We are continuing to assist industry directly. For example, today we announced grants of £6·1 million to Dunlop for the modernisation of its United Kingdom tyre operation. The two factories are in Birmingham and County Durham.

Mr. Ashley: I am sorry to persist. If the Prime Minister insists that high wages and the lack of technological change are two major causes of unemployment, as she has just done, how does she account for the fact that in the Potteries there are moderate wages, a great deal of technological change and massive exports, and yet we are faced with very serious unemployment?

The Prime Minister: I gave four reasons for increasing unemployment, of which one was the world recession. That world recession came about because people have to spend more on oil than they did before. That means that they have less to spend on other things. That does not obviate the fact that one of the main causes of unemployment now is that people take more for themselves at the expense of jobs for others.

Mr. John Morris (): Mr. John Morris (Aberavon) rose—

The Prime Minister: I might have some news for the right hon. and learned Gentleman in a moment.
Another project to which we have been giving careful attention is the National Enterprise Board investment in Inmos. The House will remember that under the previous Labour Government the bulk of the first £25 million went to providing a factory and jobs in Colorado Springs. About six months ago the NEB recommended that we should provide the second tranche of £25 million to build the first United Kingdom production plant at Bristol, where Inmos has already built its technology centre.
We had grave doubts whether we could justify building the factory at Bristol, in view of greater needs elsewhere. As a result of a full-scale review, the NEB has recommended that the production plant should be situated in South Wales. We have decided to approve the second £25 million on that basis. This factory is expected to provide about 2,000 new jobs over the next three or so years.
In his Budget Statement my right hon. and learned Friend the Chancellor of the Exchequer announced proposals for establishing enterprise zones in areas of economic and physical decay. Both the private sector and many local authorities, including many Labour authorities, have recognised this initiative as offering a real prospect of stimulating investment and job creation. Enterprise zones will offer special advantages to business and will encourage investment and initiative.
My right hon. and learned Friend announced the names of a number of authorities which had been invited to make proposals for enterprise zones in their areas. We have now selected seven locations for possible zones. They are as follows: in Northern Ireland, the inner area of Belfast; in Wales, in the lower Swansea valley; in Scotland, based on Clydebank; on Tyneside, parts of Newcastle and Gateshead; on Merseyside, Speke; in Greater Manchester, parts of the Salford docks area and the Trafford Park industrial estate; in London's docklands, the Isle of Dogs, where we propose that the urban development corporation should be the enterprise zone authority. My right hon. Friends will give further details in statements later today.

Mr. Donald Anderson (): Mr. Donald Anderson (Swansea, East) rose—

The Prime Minister: No, I must go on. The success of the zones will depend in large measure on the willingness of each authority to agree to planning relaxations and on their ability to come to quick decisions. The zones will be designated only if we are fully satisfied on these matters.
In view of the enthusiastic response from a number of other authorities we have decided to consider one or two additional areas for enterprise zones. One of these will be in the Midlands.

Mr. Anderson: Mr. Anderson rose—

The Prime Minister: Enterprise zones demonstrate the Government's determination to tackle the problems of economic and physical decay in an imaginative and radical way. We are creating an opportunity unequalled in modern times.
We regard it as a duty of the Government to mitigate the economic and social effects of change. We are prepared to help the transition to higher productivity and to more jobs. We are not prepared to buy a few extra jobs now at the expense of higher inflation and higher unemployment in future.
Despite existing difficulties, there are many exciting developments going on which are creating new jobs. [HON. MEMBERS: "Where?".] In Scotland, the electronics industry is growing rapidly, with IBM, Motorola, National Semiconductor and Pye all expanding their operations, to name just a few companies. In Wales, Sony is planning a further substantial development. A new titanium plant is to be built at Shotton and a new canning plant has just opened at Wrexham. Those are some examples.
What we need now is a determination to make all our industries competitive. That can be achieved only if we get inflation down.
In summary, we adhere firmly to our monetary strategy. The rate of inflation has started to fall. Interest rates, though still too high, have begun to come down. To reduce them further it is vital that we keep strict control over Government spending and borrowing. Unemployment is inevitably rising because of world recession and excessive pay settlements. A reduction of inflation and the growth of pay within the monetary target will lay

the basis for growth and the prospect of more jobs.
When the recession ends, the vital need will be to be competitive. When trade revives we must be ready and able to increase our share of the market. Then there can be a real prospect of prosperity and growth. Instead of using the revenue from North Sea oil to suck in imports and impoverish our industries, we shall be using this great asset to rebuild them and to provide a better standard of life for everyone.
It is no good dreaming about U-turns. There aren't any available. To adopt our policies is to be realistic and optimistic about our people, their ability, their resolution and their future. Far from demoralising the country, we are doing what the country elected us to do. This Government will have the guts to see it through.

Mr. David Steel (): We on the Liberal Bench can at least agree with the Prime Minister's opening words. Of course the country's problems cannot be solved by politicians alone. However, Britain is entitled to look for an intelligent lead from the Government, and it is our contention that it is not getting it.
The Prime Minister concluded by saying that she was doing what she was elected to do. I do not recall electors voting Conservative during the 1979 general election to increase unemployment to nearly 2 million or to double the rate of inflation. I do not recall those consequences being among the pledges of the Conservative Party at the election.
The right hon. Lady charged the Liberals with having associated ourselves with the previous Labour Government. We did that for 15 months. I am prepared to compare that 15 months with the right hon. Lady's 15 months in office on any day and on any grounds. The inflation figures came down to 8 per cent. during the 15 months when the Liberals were associating with the Labour Government. A prospective householder was able to get a mortgage at 8½ per cent. I am sure that most would say that the Government's first 15 months in office do not compare with the Liberals' 15 months in association with the Labour Government.
We welcome the announcements that the right hon. Lady has made—for example, the NEB/Inmos decision and aids to Dunlop. We are prepared to judge the enterprise zones when they come. If these two major decisions do not represent a U-turn, let us hope that they represent at least a wiggle, and perhaps the beginning of a turn in direction by the Government.
The global unemployment figures—this argument was advanced with specific reference to South Wales by the Leader of the Opposition, but it is of general application—conceal a serious situation in certain geographical areas. When Scottish unemployment is stated to be 8·8 per cent., that conceals the fact, for example, that in Strathclyde, where half the population of Scotland lives, the figure is 12·3 per cent., that within specific districts in Strathclyde—for example Inverclyde and Dumbarton—it is 15 per cent. and that within central Liverpool it is more than 25 per cent. That is why industrialists outside the London area are increasingly voicing public concern about the Government's policies. It was the Government's own appointee, as the new chairman of the Scottish Development Agency, Mr. Robin Duthie, who said a week or two ago that:
People in London and the South-East just do not seem to realise what is actually happening north of Watford".
That was not a Labour or Liberal politician but the Government's own appointee.

Several Hon. Members: Several Hon. Members rose—

Mr. Steel: I shall not give way quite so soon. It was the chairman of the CBI in the North-West of England who said:
The Government must have no idea what is happening to manufacturing industry, because if they did know they would care".
Do they not know, or do they not care? The CBI in the North-West would certainly like to know the answer.
At one point at the end of the Vietnam war it was said of the Americans that they were creating a desert and calling it peace. I believe that there are certain parts of Britain where the Government are creating a desert and calling it freedom. There is very strong reaction in many parts of the country against the inaction of Government. The Prime Minister has again said today that it is

not the Government's fault and that the policies are not deliberate. However, the effect of Government policy can be seen from a Government's inaction as well as directly from actions of Government.
I do not think one can possibly say to the unemployed teenager on the street corner "You have priced yourself out of the market", or any of the other phrases that trip from the lips of Government Ministers. As for the phrase "Let them move house", that deserves to go down in history along with "Let them eat cake" as a monumental irrelevance.
Of course there is a world recession, but in the face of such a recession it is the job of government to mitigate its effects on the country over whose activities and concerns they preside. After all, it was not the world recession which doubled VAT at a stroke, which decided to push up interest rates, which decided to increase prices in the gas industry or which decided to abolish development area grants in whole areas of the country. Incidentally, where that has been done, it has now been followed by guidelines—which in my view have not been given sufficient publicity—to the NEB and the SDA, which have now withdrawn promises of help to firms that were already in the pipeline. For example, there is one such firm in my constituency. That firm did not deal with what the Prime Minister called yesterday's jobs but with jobs on the frontiers of technology with which it may not now be able to proceed because the new instructions to the SDA have told it that it cannot go ahead and offer the help that had been agreed some time ago. In other words, there are deliberate policies of government which are inhibiting the development of the economy and of jobs in many parts of the country.
I believe that the root cause is that there is an in-built fallacy in the Government's economic thinking. I do not believe that there is any longer such a thing as the free market, either internally or internationally. Internally, the Government must cope with the fact that there are large sections of public enterprise and that there are large private combines, many of them international, which will take their business elsewhere if they find that other Governments are more sympathetic to industrial development.
There is also monopoly trade union bargaining power. All of those militate internally against the application of nineteenth century free market economics.
As for the international scene, many of our industries now find themselves having to compete with firms which locate themselves in other countries where Governments are either bearing the cost of research and development or their high technology or indulging in cheap energy policies. Let me take a specific case. The Government are faced with a plea for help from the Bowater paper-making plant in Ellesmere Port, in which 1,500 jobs are involved. But why is papermaking declining? It is because our competitors in those bastions of free enterprise—the United States and Sweden—are able to compete with us as a result of cheap energy policies.
Governments elsewhere are intervening like mad all over the place, while the British Government allow industry to sink or swim on its own, and many firms are sinking. That is particularly true of the textile industry about which the Prime Minister has heard a great deal from many hon. Members on both sides of the House. In fact, the Cabinet as a whole reminds me of those medieval philosophers who went around proclaiming that the world was flat, and when people told them "We are sorry to tell you, but it has been finally proved that it is not flat", their reaction was to say "Well, it damn well should be". That is the posture which the Government have adopted all along.
The alternative policy is to live in the world of reality and to accept that we are competing internationally in a world where other Governments do intervene in a variety of ways—intelligently and selectively—in order to assist the development of their economies. For our part, we would accept that there is a case for increasing the PSBR and for indulging in selective public investment for two purposes—to create jobs in the short term and investment in the infrastructure in the long term, because the two can be done together.
Let us take construction as an example. The construction industry is facing the most serious crisis of all. Employment has fallen dramatically, yet housing starts both in the public and private sectors are

dropping. Insulation grants have been cut. Surely employment created through insulating homes is an obvious candidate for Government support at the present time, both because of short-term employment and the beneficial long-term effects on the economy. Even selectively, there are parts of the road programme—and I am not talking about prestige motorway developments—which are at present completely undeveloped. For example, the English motorway system is not linked to the Scottish motorway system in any way. There is potential employment there. The same applies to the railways. Why should we not allow the British Railways Board to construct and introduce more modern rolling stock as it wishes to, because that would be of long-term benefit to the economy?
There is also the Phurnacite plant in the coalfields of South Wales, where the Government have specifically refused to give the NCB the extra money for the new investment to replace that plant, even though 1,000 jobs are involved. It is a product which is widely used, both domestically and in industry, throughout the country. I believe that there is a case for selective public investment with these twin objectives.
If that is to be done without creating inflation, the Government must think again about a prices and incomes policy. I shall not repeat all that I said in our debate a week or two ago. I simply say that one sees, both in the Prime Minister's speeches and in the leaks to the press, that the Government are beginning to apply a selective pay policy only to the public sector. That cannot work, because people in the public sector will not accept restraint on pay if they believe that they are being discriminated against while the private sector is allowed to pay whatever it likes at any time.
The Prime Minister said that pay in the United Kingdom was going up twice as fast as it was among our competitors. That is true, but if one looks at most of our competitors one will find that in many different ways most of them have some form of incomes policy which applies overall. That is another area in which the Government will have to undertake a U-turn.
My third suggestion is that the Government must take action to cut the overvalued state of the pound. I suggest that


they can do it in at least two ways—first, by reducing the minimum lending rate still further and, secondly, by looking again at the policy of issuing stock at fixed rates of interest into the next century. The present interest rate of 13 per cent. is well above the Government's own forecast of the rate of inflation. If that does not attract more money and push up the value of the pound, I do not know what does. I would have thought that the issue of index-linked stock would be far more sensible and would help to cut the over-value of the pound.
Fourthly, the Government should take direct measures to deal with the problem of unemployment among young people. A simple and not very expensive method would be to cut the employers' national insurance contribution for those employed under the age of 21, because the ratio of the contribution to wages is higher than among older age groups. I believe that such a policy would be justified and that it would give a stimulus to the employment of young people.
I also believe that the Government should be willing to embark on a more ambitious industrial training programme on a speculative basis, even if there are not the jobs to go to at present. The Leader of the Opposition was quite right to give specific examples from the steel industry. However, the same applies to many other industries as well. If the Government believe, as they do, that in time we shall come out of the recession, we shall need more skills, and we should be equipping our people and using our young people profitably and usefully by greatly expanding the training programme.
I do not despise the possibilities of a properly directed "Buy British" campaign. I think that people will respond to a positive lead of such a kind given by Government. If we are to have a "Buy British" campaign, it must be accompanied by legislation that requires goods to be labelled with the country of origin. The Government have been fiddling about for a year with a consultative document on the issue, instead of pressing ahead with it. I shall give the Prime Minister a personal example. With my 96 per cent. pay increase, I went to one of the summer sales and I bought the suit that I am now wearing. It is merely labelled on the inside with the washing

instructions, the composition of the material and so on. It was not until I arrived home that I found on the inside of one pocket a tiny label saying that it was made in Yugoslavia. Surely, if people are to be motivated to buy British, there should be legislation requiring as clear labelling of the country of origin as there is for the washing instructions. It would not cost the Government a penny to bring forward that legislation, and they should do so.
I should like to press the Prime Minister and the Chancellor of the Exchequer on a question that was put by the hon. Member for Bolsover (Mr. Skinner). I, too, read the report of the speech of the Minister of Agriculture, Fisheries and Food in which he said that the direct cost of unemployment was £7 billion a year. Is that the correct figure? Does it include the supplementary benefit cost and the losses of tax income through wastage of people on unemployment benefit? What is the Government's estimate, not in human terms, but in financial terms, year by year, of allowing the dole queue to grow? It is essential that the House should be given more guidance, because it is against that cost that we can weigh the cost of some of the measures that some right hon. and hon. Members are advocating the Government should take to help cure unemployment.
I believe that one of the reasons for a public mood of despair—the Prime Minister should not try to convince herself that the public mood is anything other than one of despair—is that the process of industry is made the plaything of political doctrines. The Government are busy selling off bits of public enterprise to try to balance the books, leaving the less profitable parts in public hands. There is the constant argument "Let us push back the frontiers of State enterprise." At the same time, the Labour Party in opposition introduce an interim manifesto which proposes to introduce an enabling Act allowing Ministers to nationalise any industry by statutory instrument in order to push forward the frontiers of the public sector. Industry is caught in this perpetual argument about where the boundary should be drawn. We should concentrate on, and create conditions of, stability through the National


Enterprise Board, with pragmatic decisions and through reform of industrial relations, aiming at making the private sector as profitable as possible, and the public sector as efficient as possible. If we did that instead of arguing about where the boundary should be drawn, and if we took ourselves away from the adversarial system of politics, I believe that industry would look forward to the future with a great deal more confidence.

Mr. John Peyton (): When the leader of the Liberal Party says that despair is the mood of the country, he is falling into the common mistake of thinking that more people share his views than is in fact the case.
The Leader of the Opposition made a remarkable speech, and it received a strange reaction from his Back Benchers—an interesting variation on the curate's egg. The hon. Members immediately behind him thought that there was merit in his speech. His hon. Friends below the Gangway thought that there was none. He has problems with the unity of his party with which we can all sympathise. However, I do not believe that he helped himself when he talked about a slump induced by the Government. He knows that politicians thrive on the benefits of their policies, and not on the injuries. That kind of talk comes ill from a right hon. Member who has enjoyed his high office.
The Leader of the Opposition showed that memory was not his strongest feature. For instance, he forgot that he and his party have been in office for 11 of the past 16 years. He made no mention of oil prices. He passed by, with hardly a glance, the problems of inflation, and at the end of his speech in a most astonishing way, he referred to the package of measures. That was the classic case of the conjuror who left the rabbit in the hat.
A debate such as this allows the Government to restate their policies and objectives, and I am glad that my right hon. Friend the Prime Minister should have seized the opportunity as she did. I applaud the resolution that she and her colleagues have shown in difficult times, and the way in which she has resisted the

pressure to make what is commonly known as a U-turn.
We have yet to hear a contribution to the debate from the Left, whose input into our affairs in recent years has been as unhelpful as it could be. The right hon. Member for Bristol, South-East (Mr. Benn) constantly speaks about the need to impose irreversible change upon us, and he does so with all the fervour of an ayatollah, although he has not yet gone to the extreme of saying that stoning is good for people.
In this House we are notoriously fond of committees, and we make a habit of demanding inquiries. I wonder why we cannot abandon some of the more stupid traits associated with votes of censure and ask ourselves seriously how we came to this pass—a pass that is a great deal more wretched than that of many of our competitors. It did not happen suddenly. I wonder whether it will be possible to put together some sort of national resolve, not to find a scapegoat, but to find a way out and a way through our problems.
It is no good our going back to useless nostrums that failed us yesterday. Over the years we have found it comforting to tell ourselves that we have somehow risen above the economic facts of life. Mr. Attlee felt that way many years ago, when he declared that his Government would not be the prey of blind economic forces. However, our country has been severely buffeted by those forces ever since. We have kept the spending habits of a rich nation, without taking any trouble over how we should remain rich.
How else can we explain our extraordinary attitudes towards industry? There has been endless tampering, for many reasons, most of them unrelated to the commercial success of industry. We have neglected the research, development and innovation which are the keys to that prosperity which we take for granted. The taking of risks has hardly been encouraged; the rewards have been eroded; there has been ample harassment, particularly from Labour Governments, and there has been plain neglect.
The belief that the Government could and should control wages has led repeatedly to a build-up of pressures which have proved irresistable. It has also led us into the quagmire of comparability, which has diverted attention altogether from the need to encourage the skills of


which we were short, and of which we remain short.
We also thought that industrial relations needed our attention. We have somehow kidded ourselves that a combination of weakened management and privileged unions, resulting in disruption, loss of competitive muscle, lower earnings, less investment and fewer jobs, could help. The contribution by the House of Commons to industrial relations is nothing of which we have reason to be proud.
I referred to the loss of rewards and of encouragement in industry. The real after-tax rates of return on the trading assets of our commercial and industrial companies were 12·1 per cent. in 1964 compared with 4·1 per cent. in 1979—a clear and lucid explanation of why we are in our present troubles.
Manufacturing investment in Japan in 1978 and 1979 grew by an average of 3·1 per cent., in Germany by 1½ per cent., in the United States by 1·1 per cent. and in the United Kingdom by 0·2 per cent. Those figures reflect the results of policies of neglect of investment and failure to innovate. In 1978 and 1979 our unit labour costs went up by more than 20 per cent.—double the increase of our competitors. Ad hoc Government policies cannot quickly be put into force to redress the effect of the years so vividly shown in the figures which I have quoted.
Should we not inquire into the arrangements of our method of government? Are we satisfied that Government Departments are adequately designed to do the difficult jobs for which they were set up? Can they control their own sprawl? Can they control the money that they pay themselves?
It is worth-while to ask about the performance of Parliament. What have we to say about the cascade of legislation which pours out from here, much of it incomprehensible and imposing enormous burdens upon the small businesses which we profess to want to help? Are we satisfied that these new Committees which we have set up are making a worthwhile contribution to government instead of a substantial contribution to Government expenditure?
The House of Commons would do well on an occasion such as this to ask whether over the years it does more to divide or to unite this nation. Do we

spread trust or sow mistrust? If, as I suspect, we assiduously sow mistrust and disunity, we are doing nothing to earn the gratitude or respect of the nation.
We are in our present trouble because we have consistently yielded to pressures to search for and adopt painless solutions when none was available. We have for long neglected to look after the future and to take care for the long term. The future has come sooner than we expected. If we are to meet our problems, we shall have to do so in different ways, not by eating great mouthfuls of seedcorn, which those spurious advocates on the Opposition Benches urge upon us, but by paying attention to the need to invest, as other countries do, and to provide and furnish a modern, up-to-date industry which will create wealth and enable this country again to hold up its head among nations.

Mr. J. Enoch Powell (): The Leader of the Opposition, in moving the motion, said that the purpose of this debate is to prove that there is an alternative to the policies being pursued by Her Majesty's Government. That being so, it becomes all the more surprising that in the debate, continued today but carried on weekly during the past year between the two Front Benches, there has, when one looks more closely, been so much common ground.
It is not exactly a debate of the deaf. There are none so deaf as those who will not hear—or rather, there are none so deaf as those who do not wish to be caught hearing. One often detects common ground, substantial agreement, between the two Front Benches combined with the desire to disavow and conceal it.
There is no disagreement between the two Front Benches as to the consequence, under any Government or any policy, if a Government fail to borrow large sums of money which they need to cover their current outlays. The Leader of the Opposition and the Shadow Chancellor of the Exchequer know that perfectly well, as well as do the Government and their supporters. Indeed, the texts which remind us of their past assertions to that effect are read out regularly, almost like a litany, every week on Tuesdays and Thursdays between 3.15 and 3.30 pm. It is common knowledge and common ground that,


whatever may be the other ingredients, or whether there are or are not other ingredients, of the scourge of inflation, it is impossible for it to exist unless the Government are attempting and failing to borrow large sums of money with which to meet their current outlays.

Mr. Norman Atkinson (): The right hon. Gentleman is the biggest beneficiary of public borrowing. It is absolute hypocrisy. Let us start by getting out of Ireland.

Mr. Powell: I am obliged to the hon. Gentleman for his intervention, albeit sedentary, at so early a stage. He is one of those, who are not uncommon—especially, but not exclusively, on these Benches—who make no distinction between controlled expenditure and no expenditure at all and who therefore think that if one argues for a limit on expenditure one must be opposed to all public expenditure. There is a difference between the two. It is possible sensibly to consider the relative benefit of different forms of public expenditure and at the same time to argue that the global total of public expenditure is of supreme importance.
There is another respect in which there is acknowledged common ground between the two Front Benches. They both know that the present level of interest rates in this country, which requires enterprise to borrow at interest rates of 20 per cent. and higher, is intolerable and that such interest rates place a hopeless inhibition on employment, on industrial development and on economic progress.
The two Front Benches also both now that that level of interest rates is a principal cause of the so-called excessively high level of sterling. There is a sense in which a floating exchange rate can never be described as artificial; for it is always the rate at which supply and demand balance at a particular moment. However, given so artificial and unrealistic a domestic interest rate, it is fair to regard the consequential exchange rate of sterling as a seriously distorting factor in the economy.
It is convenient that last week the Leader of the Opposition summarised briefly what he has said at greater length this afternoon. He then put forward what he considered to be the alternative policy, and summarised in a single sentence the

alternative that he intended to put before the House this afternoon at greater length. The alternative policy, he said, consisted in
a reduction in interest rates
and
an increase in public expenditure".—[Official Report, 22 July 1980; Vol. 989, c. 269.]
The Leader of the Opposition knows the consequences of reducing interest rates and increasing public expenditure as well as anyone else. It would not only increase the amount that the Government require to borrow in order to meet their outlays but would also ensure that they failed to do so on a massive scale. So the Leader of the Opposition has accepted that the level of borrowing and of deficit financing is the real cause of inflation. He has accepted that the high level of borrowing causes high interest rates. Yet he has put forward a proposition that runs contrary to the facts, as he knows them. He has put forward a policy of reduction of interest rates and an increase in public expenditure; and, lest there should be any misapprehension about the meaning of his proposals, I will read out to the House what the right hon. Gentleman said to the Prime Minister immediately afterwards:
Does the right hon. Lady not recognise that she has deficit financing now, to the tune of £10 billion"—
that is perhaps slightly on the high side; I believe that I see some assent to that proposition from the Treasury Bench—
and that it should be increased?"—[Official Report, 22 July 1980; Vol. 989, c. 269.]
That is the Opposition's central recommendation. That is what lies behind the censure motion.
The Leader of the Opposition understands that his logic is false: he tells the Government that they are driving within a foot of the precipice, and that this only shows they can go within a quarter of an inch of it. When the Leader of the Opposition was in government, he and his colleagues repeatedly stated that deficit financing and the inability to meet that deficit by genuine borrowing were the cause of inflationary disaster. Yet the right hon. Gentleman now tells the Government that they should increase that deficit.

Mr. Geoffrey Rippon (): In view of what the right hon. Gentleman


said about interest rates, does he at least agree that the result of increasing interest rates over the past year has been to add about £900 million a year to the public sector borrowing requirement? Some of that money might be available for other purposes.

Mr. Powell: Of course, it is a race between the addition to public expenditure that results from pushing up interest rates and the effect of high interest rates in enabling the Government to meet their current deficit. As the right hon. and learned Gentleman implies, there is a point at which the attempt to meet the borrowing requirement by pushing up interest rates becomes self-defeating.

Mr. Robert Sheldon: Perhaps the right hon. Gentleman will also deal with the point which arises from the increase in unemployment. As he knows, in addition to the fact that the public sector borrowing requirement has to be increased to deal with high interest rates, one must also deal with the large amount of extra money that is needed to pay unemployment benefit. The public sector borrowing requirement has to rise for two reasons, both of which are dictated by the Government.

Mr. Powell: The right hon. Gentleman has been a distinguished Treasury Minister and he understands the trick implicit in his intervention. It is perfectly possible to take any element in the total estimate of public expenditure of a particular year, such as the estimated cost of the social services including unemployment benefit in a particular year, and then to isolate that item and equate it with the whole or part of the net borrowing requirement. He also understands that that procedure is fallacious.
The Leader of the Opposition could have argued that he believed it was possible to increase public expenditure without increasing the public sector deficit. He could have argued that at the same time the expenditure could generate such an increase in national income that the public sector borrowing requirement could be reduced and to that extent become easier to meet by genuine lending. He did not so argue. It was conspicuous that the right hon. Gentleman did not suggest, at any point in his speech, that the increase proposed in public expenditure would be self-financing. The Leader of the Opposition's
theory was not that the increased expenditure would be a method of generating additional income.
What the right hon. Gentleman did mean was perfectly clear. What he meant was consistent with his knowledge of the consequences when the public sector borrowing requirement is not met by genuine borrowing. He knew that the result would be increased inflation. The very burden of his speech was that inflation reduces unemployment and we should have more inflation. [Interruption.] I shall test the Opposition and see whether they are really recommending an increase in inflation. For, if they wish, they can increase public expenditure without increasing the public sector borrowing requirement.
If the Opposition do not want to increase the risk of inflation, they can easily advocate a way in which that can be avoided. They can increase public expenditure without increasing inflation so long as they also advocate increased taxation. When the right hon. Lady suggested that ultimately taxation was one of the factors in the equation and put it to the Opposition that perhaps they should consider increasing taxation, there was a nod here—

Mr. Norman Atkinson: Mr. Norman Atkinson rose—

Mr. Powell: —and a grunt there, but there was not that full-hearted roar of approbation which would have come from the Opposition Benches if they really had wanted to increase expenditure without increasing inflation. In fact, the Opposition do want to increase both expenditure and inflation, because they believe—and have said—that increased inflation is the way to combat unemployment. They do argue that, if one puts more money into the system, one will have less unemployment. That is their alternative case, and it should be taken seriously.

Mr. Tam Dalyell (): rose—

Mr. Powell: It is curious, but I have spent most of the latter part of my parliamentary life giving way to the hon. Member for West Lothian (Mr. Dalyell). It has almost been one of my obsessive habits. On this occasion, I shall make a compact with him. Let us make this debate an exception. Will he allow me to get away with it just for once?

Mr. Dalyell: Mr. Dalyell rose—

Mr. Powell: Perhaps the hon. Member was not present when I had a little exchange with the hon. Member for Tottenham (Mr. Atkinson) [HON. MEMBERS: "He was."] I was trying not to be too offensive to him, but, if the hon. Member was present, he failed to take the point that I made.

Mr. Robert Hughes (): The right hon. Member wants to keep spending in Northern Ireland but reduce expenditure elsewhere.

Mr. Powell: Well, at least that would be a respectable argument. [Interruption.] It would be perfectly consistent, as it is consistent for every Minister at present in government to say that he accepts the necessity of a limitation upon total expenditure but at the same time intends to argue for the form of public expenditure with which he is particularly concerned. What we are talking about in this debate is the total of public expenditure, the total of the borrowing requirement, and the intended consequences of deliberately increasing it.
If there is an alternative being put forward—we are told by the Leader of the Opposition that there is—that alternative is more inflation; and it is a serious proposition.

Several Hon. Members: Several Hon. Members rose—

Mr. Powell: I am sorry. I intend to proceed with my arguments.

Mr. Norman Atkinson: The right hon. Gentleman is a charlatan. He should answer the questions that are put to him.

Mr. Powell: Willing as I am to conduct seminars, this is a debate in which many hon. Members wish to take part, and all of us are under the constraint of time. Therefore, I intend to address myself to the proposition that is being put forward to the House and to the country by the Opposition—[Interruption.]

Mr. Atkinson: The right hon. Member is getting away with murder.

Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I cannot hear what the right hon. Gentleman is saying to the House.

Mr. Robert Hughes: That is to your benefit, Mr. Deputy Speaker.

Mr. Powell: I am sorry, Mr. Deputy Speaker, if you did not hear. I repeat that the proposition being put to the House and to the country by the Opposition is that we should not merely allow, but cause, the rate of inflation to increase as a remedy, albeit temporary, for unemployment.

Mr. R. B. Cant (): Mr. R. B. Cant (Stoke-on-Trent. Central) rose—

Mr. Powell: I am not giving way now. If I believed that by increasing the rate of inflation it was possible to put ½ million, 1 million or 1½ million of my fellow countrymen back in employment. I would consider that a proposition that should be taken very seriously. But there is still something to come afterwards. It is probably true that, if we push up inflation deliberately to 25 per cent., 30 per cent. or 35 per cent. we would at first gain a reduction in unemployment and an increase in employment. But one could not stop there. One would need to continue with increased doses of the same medicine. The nature of inflation is that it is not static but dynamic: one must go on to ever higher rates.

Mr. Norman Atkinson: Cut spending in Northern Ireland.

Mr. Powell: Even if inflation were continued up to Brazilian levels of 300 per cent., there still must come a point at which it must stop, a point at which one must stop inflating and regain a currency of stable value. So all that would happen if we acted upon the Opposition's ideas would be to increase unemployment, misery and disruption in the future.

Mr. Norman Atkinson: The right hon. Member should get over to the other side. He is only concerned about attacking blacks and underprivileged people.

Mr. Deputy Speaker: Order. The right hon. Gentleman has a right to make his own speech and to be heard in silence. [HON. MEMBERS: "No, No."]

Mr. Cant: He will not give way to anybody.

Mr. Gerard Fitt (): On a point of order, Mr. Deputy Speaker. We have just heard that the right hon. Gentleman has a right to make his own speech. I understand that one of the


reasons why he may have been called is that he is a right hon. Gentleman. But there are other speakers from Northern Ireland who may not be called in this debate, and who hold a completely and utterly different point of view from that of the right hon. Gentleman—[Interruption.] The right hon. Gentleman is just an import into Northern Ireland.

Mr. Deputy Speaker: Order. There are hon. Members with many points of view in this House and they all have a right to be heard, including the right hon. Gentleman.

Mr. Robert Hughes: On a point of order, Mr. Deputy Speaker. At the risk of incurring the displeasure of the occupant of the Chair and possibly cutting out my own opportunity to speak later, I must point out that some of us are becoming increasingly annoyed at the way in which Privy Councillors from a minority party on this side of the House are called in debate after debate after debate. They take up Opposition time and cut into the time of Back Benchers of the major parties who have no opportunity to put forward their point of view.

Mr. Deputy Speaker: Order. That is not a point of order. It has long been a right of Privy Councillors to be called early in debates, and the right hon. Gentleman was called by Mr. Speaker.

Mr. William Hamilton (): On a point of order—

Mr. Deputy Speaker: Order. Points of order of this kind will only ensure that those who wish to speak will not have an opportunity to do so.

Mr. Hamilton: That will happen in any event. I want to ask you, Mr. Deputy Speaker, and Mr. Speaker, to read a report from the Select Committee on Procedure of a few years ago on this very point. That report indicated that the Chair had no obligation whatever to call Privy Councillors. It urged the Chair to use its discretion in a wiser way than it has been doing ever since.

Mr. Deputy Speaker: I think that the hon. Member may have an opportunity to make that point in a procedure debate later in the Session.

Mr. Hamilton: I think I will, too.

Mr. Powell: I do not know why Labour Members should be so unwilling to consider the consequences for unemployment of an increase in public expenditure, an expansion of money and an increase in the rate of inflation. These are subjects that are—

Mr. Norman Atkinson: They are being distorted. The right hon. Member talks absolute nonsense. He is an economic illiterate.

Mr. Powell: If I am falling into error, Mr. Deputy Speaker, then no doubt in the remaining course of the debate attention can be drawn to it. What cannot be doubted is that, since its very inception, the Labour Party has been intimately concerned with the relationship between unemployment, the money supply and inflation. If these are not subjects with which the Labour Party is desperately and sincerely concerned, I do not know what should be.
I am pointing out the consequences of the recommendation that the Opposition are making. If they are not arguing for increased inflation, they must argue for taxation to be increased pari passu with the increase in expenditure for which they call. Perhaps that will come later. Perhaps the right hon. Member for Ebbw Vale (Mr. Foot) in winding up will make good the omission. Certainly, I have criticised the Government for having been too anxious and too quick during their 15 months of office to reduce taxation. I have argued that, in the light of their supreme and central task, they should have increased it instead—

Mr. Norman Atkinson: They have not reduced taxation. They have increased it. They have doubled VAT.

Mr. Powell: —but unless and until the Opposition make it clear that their plea is for increased expenditure to be balanced by increased taxation, we must take it, as will be found to be implicit—I believe that at one point it was explicit—in the speech of the Leader of the Opposition that they are asking for an increase in the rate of inflation as a means of dealing with unemployment.

Mr. Stuart Holland (): Will the right hon. Gentleman give way?

Mr. Powell: I am concluding my remarks, and the hon. Gentleman may have a chance to speak.
In so doing the Opposition are misleading the people of this country. If they offer an apparently easy option to the country—if to 2 million people unemployed they say "There is a solution to your plight by way of further inflation"—they are cruelly misleading those people, and the counsel that they proffer is profoundly misguided.

Sir William Clark (): It is always a great pleasure to follow the right hon. Member for Down, South (Mr. Powell). I shall later return to the question of the public sector borrowing requirement, to which he has paid so much attention.
It is hypocritical of the Opposition to table a motion of no confidence in the Government in view of the record of their last five years in office. They doubled inflation, unemployment and borrowing. They criticise this Government for their policies, but we have had all the others—incomes policies, social contracts, the dash for freedom and the pay pause. We have ended with economic chaos.
Overborrowing is a major factor in the inflationary pressures that we suffer. The national debt was started over 300 years ago. By 1974, when the last Labour Government took office, the national debt was around £40,000 million. It took 300 years for the national debt to reach that figure, yet in five short years, through overborrowing, a Labour Government managed to double it to about £80,000 million.

Mr. Robin F. Cook (): Will the hon. Gentleman give way?

Sir W. Clark: Not yet.
That record should not commend the Opposition to the people of this country.
As was brought out recently by my right hon. and learned Friend the Member for Hexham (Mr. Rippon), the increase in the PSBR and the national debt means that there is an increase in the budgetary pressures on the Exchequer. To service the national debt costs between £9,000 million and £10,000 million. That is a great drain on the country and on the

money that any Government would like to spend on extra social services and so on.
Every time the Opposition have an argument with the Government they say that the Government must intervene. People are getting a little sick of that argument. What does Government intervention mean? It means only that the taxpayer will be asked to pump more money into any area that the Opposition consider requires Government intervention. Most Labour Members like high taxes. Under their Government the highest taxes stood at about 98 per cent. They also keep asking for Government intervention indirectly to purchase jobs. No economy can last if a Government continue to purchase jobs. In order to survive we must be competitive. To subsidise job creation is ridiculous and self-defeating.
We also have the argument for protecting our home industries from unfair competition. In passing, I believe that the Government could reconsider our dumping regulations, which are often so slow to operate that the damage is done before effective action can be taken. However, leaving dumping aside, I agree with my right hon. Friend the Prime Minister and others that import controls will inevitably invite retaliation from our overseas customers. Import controls would also cosset British industry, which cannot afford to be cossetted. It has been cossetted for far too long. At long last this Government have given British industry the right and opportunity to manage its own affairs.
We are getting the change in attitude that we sorely need. Leaving aside the needy and the old, no one has a right to expect a living at the expense of others. The only way in which the country can once again become prosperous is to return to the old-fashioned principle that one gets nothing that one does not work for.

Mr. Frank Haynes (): People cannot get jobs.

Sir W. Clark: It will take time for the Government's economic changes to take effect.

Mr. William Hamilton: Three years.

Sir W. Clark: Two or three years. Who knows?
The Government cannot create prosperity. Listening to the Leader of the Opposition one would think that the Government had only to increase the PSBR and prosperity is round the corner. That is rubbish, as the right hon. Gentleman knows. All that the Government can do is set the scene for economic expansion. It is time that we brought a sense of realism to the talk of job creation. Counting lamp posts and checking up on pushchairs will not do the country much good.
I turn now to Supplementary Estimates. I am delighted that my hon. Friend the Financial Secretary to the Treasury is in the Chamber. As my right hon. Friend the Member for Yeovil (Mr. Peyton) said, we must look at the structure of government. We have the Public Accounts Committee and the new Treasury Select Committee, but they are all looking at something that has happened. The money has disappeared. There is little point in knowing why the money has gone. We need to stop it going.
As I have said before, it is no good giving a spending Department a budget and leaving it until it receives the budget for the following year. We want a Minister responsible for finance in every spending Department. That would be analagous to what happens in business, where there is a finance director at head office and finance directors in each subsidiary who are responsible to their managing directors, but have access to the finance director at group headquarters. It would be useful to consider such an idea, because the control of public spending is not as effective as it should be. We must not rely on the PAC and Select Committees alone. We must control spending within Departments.
I applaud the Government's decision to abolish exchange controls. A lot of poppycock is talked about getting the exchange rate down. Our industrialists operated for a long time with a £2·40 exchange rate against the dollar, which is almost the same as the present level. If the exchange rate came down, the import bill would increase and that would add to the inflationary pressure.
I congratulate my right hon. Friend the Prime Minister and her colleagues on the economic strategy that they have carried out to date. I urge them not to be diverted. We have tried all the gimmicks

and they have not worked. They left us with the sort of chaos that we inherited when we took office.
Our people do not look at the finances of the country in simple terms. In fact, they are relatively simple. A household with an income of £100 a week that spends £110 a week can go on like that for some time, but eventually it will have to retrench, and not merely to only £100 a week, but to £90. That is the position that the Government are in. I urge them to keep going on the same course.

Mr. Eric S. Heffer (): The Prime Minister's speech was the most ice-cold speech that I have heard in the House. It was also the most inflexible speech that I have heard and if the right hon. Lady is correct in saying that there can be no U-turns, I fear for the future of our country.
I can foresee nothing but industrial deserts, with millions of our people out of work, increasing misery and poverty and social unrest on a scale never known in the history of Britain. That is the prospect that the right hon. Lady put before us. It is a horrific prospect and I hope that the people of this country will note carefully what she said, because, if they understand her policies, they will quickly reject them, as they are already beginning to do.
As the Leader of the Liberal Party said, there is a mood of tremendous despair in this country. I can testify to that. There are 107,000 people out of work on Merseyside—15 per cent. of the population. At the last count, 12,000 young people were chasing 20 jobs. There is no future for those young people under the Government's policies. It is obvious that there is a mood of despair, particularly in areas such as Liverpool.
The Prime Minister says that the unemployed ought to seek jobs elsewhere and that there should be greater mobility of labour. I pointed out at Welsh Question Time yesterday that workers from Liverpool, particularly the unskilled, used to find jobs at Shotton and elsewhere in North Wales. Now that the steel works are to close, where will they find jobs? It is no good workers from Shotton looking to Merseyside for employment and it is no good Merseyside workers looking


to North Wales. There is no employment in either area.
The Prime Minister apparently does not understand that skilled workers have always been mobile in their employment. There are Scotsmen and Welshmen in jobs all over the country. Those left behind are the unskilled. It is not easy for skilled men to find jobs at present and there is no hope for the unskilled. Where should they go? Are they expected to join those who have to live under the arches in London every night because there is nowhere for them to lodge?
The Prime Minister should remember that in the 1930s many people tramped this country seeking employment. I worked with a man who was unemployed for nine years in the 1930s. After the war, he never stopped working on building sites. He worked for every second. I said to him "Don't kill yourself, brother" and he replied "I was nine years unemployed". He tramped the country looking for employment and the only work that he found was fighting the Nazis in Europe during the Second World War. The Prime Minister ought to appreciate how working people have suffered in this country and she ought to appreciate where her policies are leading us.
I wish to refer not only to the speech of the right hon. Member for Down, South (Mr. Powell) but to the piece that he wrote in the Sunday Express, in which he referred to the decisive battle against inflation and suggested that we were in the same position today as we were before the Battle of Waterloo.
There have been many other decisive battles since then and our generals have learnt that they do not need to destroy their troops in order to win a battle. They learnt that in the Second World War and did not repeat the mistakes of the First World War.
Economics has moved on as well. We have heard the ideas not only of Keynes, but of Harold Macmillan, who is never mentioned by Conservatives nowadays.

Mr. Giles Radice (): They are ashamed of him.

Mr. Heffer: Harold Macmillan believed in economic intervention. He believed in—

Mr. J. Enoch Powell: Inflation.

Mr. Heffer: Inflation will come down as a result of the Government's policies. The price will be mass unemployment, misery and poverty for our people. Yes, it will come down because the Government have a way to solve an economic crisis such as this one. Their way is to put the burden on the shoulders of working people. That is the answer to the problem put forward by the right hon. Member for Down, South and the Prime Minister.
Of course, the right hon. Gentleman is somewhat selective in his fight against inflation. Of course, he was happy to accept when it was pointed out to him, that interest rates had added to the public sector borrowing requirement. He admitted that unemployment benefits—a point made by my hon. Friend the Member for Tottenham (Mr. Atkinson)—had added to the PSBR, but the right hon. Gentleman did not mention Harland and Wolff. When that matter was raised with him he said that that was controlled expenditure. He felt that controlled expenditure was all right, particularly when it was in his own constituency and particularly if it was in Northern Ireland.
However, it is not all right. The global figure is wrong. I have listened to the speeches of the right hon. Gentleman very carefully and have always been deeply impressed by them. But I must say to him that, for the first time, I was not impressed today. I have always thtought his views were wrong, of course, but today I was not impressed because the right hon. Gentleman got it totally and economically wrong in the way that Conservative Members have got it wrong.
I shall not make a long speech. However, an alternative solution was pointed out by my right hon. Friend the Leader of the Opposition. There is no basic difference of approach between what my right hon. Friend said and what the Left has to say on these matters. If we look at the document "Peace Jobs Freedom" and if we look at the TUC liaison committee document issued this week—and some of us on the National Executive are associated with that document—it will be seen that there is no fundamental difference of approach. We are making a number of extremely important points.
I shall examine those points and suggest an alternative solution. We must expand the United Kingdom economy by


domestic reflation, including increased public spending. We are not ashamed of that objective. We think that that is the only way to deal with the current crisis. We also believe that it is right that there should be appropriate supporting policies on exchange rates and interest rates. We believe that there must be controlled import penetration but that does not mean that we believe in total import control in every industry. We have never advocated that. We have always argued for selective import controls. Who can tell the car workers, the textile workers, the boot and shoe workers and those in the wood-working industry—all of whom are receiving dole of next to nothing—that there should be no selective controls of any kind? Can we honestly say that to those workers, when we know that, though Japan does not have import controls the Japanese certainly make it difficult for us to get our exports into their country? Selective controls are absolutely vital.
We believe that there is a need for improved trade preferences on import penetration for developing countries, within agreed ceilings. We are not unconcerned about Third world countries. I could go on explaining our point of view but I shall not do so. My right hon. Friend explained it extremely well.

Mr. Alan Clark (): Will the hon. Gentleman give way?

Mr. Heffer: If the hon. Member for Plymouth, Sutton (Mr. Clark) does not mind, I shall not give way. I do not wish to be discourteous but there are many hon. Members waiting to speak in the debate and I wish to give them that opportunity.
I conclude with a quotation from this TUC document where we set out the basis of an alternative approach to the problems in industry and trade. We say:
In doing so, we reject utterly the notion that only through the policies of a slump and mass unemployment can the economy be made strong. Our priority is the restoration and maintenance of full employment: and we contend that unless the policies set out here are carried through, it will be impossible to achieve sustained full employment.
I believe that, and my party believes it. If there are not to be any U-turns, and if Conservative Members are not sufficiently courageous and prepared to force their stupid leadership to change, we must

have a general election at the earliest possible moment. The Government have got to get out.

Mr. John Townend (): I am sure that my right hon. Frends will be relieved to know that I am 100 per cent. behind the Government's economic policies. I do not intend to bore the House with details. I cannot compete with the great eloquence of the Prime Minister, nor with the cold logic of the right hon. Member for Down, South (Mr. Powell). However, one does not have to be particularly clever to see that all the policies that have been tried over the past decade have failed.
The Leader of the Opposition did not put forward new proposals today. He simply advocated more inflation. It is incredible that the Opposition have called for a "no-confidence" debate on the issue of unemployment as if the basic cause of unemployment was Government policy. If that were so, hon. Gentlemen presumably blamed their own Government when unemployment doubled during their period in office.
Though Government policies may affect the level of unemployment, I submit that the basic cause of unemployment under successive Governments is that we have failed to produce the right goods of the right quality at the right time and at the right price not only for customers abroad but for people at home. High unemployment is not due principally to a failure of government. It is due to the failure of management and workers in industry.
Failure in the shipbuilding industry, the car industry and the steel industry has not been the fault of government, though Governments have had an adverse influence when they have interfered or nationalised.
Hon. Members should compare the unsuccessful industries with successful industries such as agriculture, tourism, banking, the retail trade and many small businesses. The great difference is that the unsuccessful industries are almost—

Mr. Robert Hughes: Will the hon. Gentleman give way?

Mr. Townend: Many hon. Members are still waiting to speak. Therefore, I shall not give way. The unsuccessful


industries are all highly unionised and many of them have closed shops. The successful industries are either non-unionised or their unions are weak. In those successful industries the result has been a flexibility of labour, high investment and high profitability and there is no doubt that they lead the world. The unsuccessful industries have been subject to a high incidence of strikes. They have had excessive manning levels and a bad record in industrial relations.

Mr. Bob Cryer (): Will the hon. Gentleman give way?

Mr. Townend: No, I shall not give way. We cannot, therefore, help coming to the conclusion that one of the basic causes of unemployment has been excessive union power. That power has produced an appalling industrial record of stoppages and restrictive practices.
The hon. Member for Liverpool, Walton (Mr. Heffer) spoke of the car industry. The car industry has not been beaten by imports. It has been beaten by workers who have too often been on strike so that goods could not be delivered when customers wanted them. Standards of finish and service have also been bad. My right hon. Friend the Prime Minister mentioned the Isle of Grain power station. The cost of the Humber bridge has almost doubled. One has only to look at such examples to appreciate the effect of too much union power.
The Government have started to restore the balance between unions and management with their Employment Bill. I am delighted with the Prime Minister's undertaking that if the Bill turns out to be inadequate the Government will introduce further legislation. The only danger to the Government will arise if they lose their nerve. I am convinced that under the leadership of the Prime Minister that is not a possibility. In certain areas they should pursue their policies with greater vigour. Provided that they stick to their policies, I see no reason to fear the future.
The Government must continue to exercise increasing control over public expenditure and steadily reduce public borrowing. Basically, that means that we must take control over public sector pay. In the last year, public sector pay has risen far higher than the country can

afford. Principally, that is due to the inheritance left by the last Government—the Clegg commission and the Pay Research Unit. The system is unfair to people in the private sector who have to accept the economic facts of life and who are settling for reasonable wage increases.
Excessive public sector settlements in the last year have helped to reduce the speed at which public sector borrowing has been controlled. Therefore, the reduction in interest rates, which we all want, has been delayed. I agree with the right hon. Member for Down, South (Mr. Powell) about the importance of that.
I am delighted to learn that this winter the Government intend to take a strong grip on public sector pay. However, they cannot rely on cash limits alone, for three reasons. First, as a leader in local government I found the timing of expenditure important. Officers tend to time expenditure at the end of the year so that little is spent in that year and a large chunk is spent the following year.
Secondly, if the number of staff is reduced and higher wages are paid out of the savings a higher percentage increase in wages will occur than is acceptable to the country as a whole. Any savings made by reductions in staff should be for the benefit of the taxpayer. Additional reductions in staff caused by excessive pay increases will reduce the number of jobs and increase unemployment. The unemployment pay comes from the public sector.
Thirdly, nationalised industries operating monopolies are able to give excessive wage increases and keep within their cash limits because they can pass the cost on to the taxpayer or the consumer. A classic example is the 23 per cent. increase for post office telephone engineers which, I have no doubt, will be paid for by higher telephone charges. That is one reason why I support the breaking of the monopoly.
The House gave me its support for a Bill to abolish the Clegg commission. The Government should abolish the commission, or put it on ice, along with the Pay Research Unit. Comparability is not acceptable to the country at this time, unless that concept operates for people in the private sector who have to accept low or no wage increases. Some people


say that the public sector has been cushioned by high wage increases. Others say that the public sector is feather-bedded by inflation-proof pensions.
I turn to the question of youth unemployment. When my right hon. Friend the Secretary of State for Industry said that people were pricing themselves out of jobs, he never said a truer word in relation to young people. For years, young people have been priced out of the market. That is not the fault of young people, nor is it the Government's fault: it is the fault of the system which we have inherited.
There are nationally negotiated agreements for apprentices. A 17-year-old apprentice in the building industry receives £56 a week, whereas a skilled man gets £80. Many firms cannot afford to take on apprentices. In my constituency many small building firms say that they cannot afford an apprentice and that they would rather pay the extra and employ a skilled man.
Surely, when thousands of young people are queueing up for apprenticeships, it would be better to pay them £20 or £30 a week in the first year. A school leaver is often a liability to an employer in the first year, if one takes into account the cost of training and supervision.
The wages councils dictate that employers should pay £33 to a 16-year-old compared with £51 to a skilled man. Schoolteachers often inflate a young person's idea of his own worth. They encourage school leavers not to accept jobs for low wages.
The Select Committee of which I was a member visited the West Country. We interviewed employers and visited training centres. We investigated TOPS and STEP. We were told that those schemes were important because children had to be prepared for work. We were told "We must get the children to go to work on time. We must get them to go every day, to consider their appearance and to improve their literacy and numeracy." When we said that children surely had to go to school on time and every day, we were told "No way". It is a tragedy that so many unskilled children are not prepared by the education system and are not given the necessary disciplines of promptness, courtesy and good appearance.
What action should the Government take to alleviate youth unemployment? The youth opportunities programmes are well-intentioned and I support them, but they are no answer to the problem. They are palliatives. We must change the system which allows young people to price themselves out of the market. In general school leavers do not need much money. Usually, they live at home with their parents and rarely have the expense of a family or a house. If they were employed at lower wages they would still be better off than their contemporaries at school.
The Government should call a conference with the CBI and the TUC to negotiate apprentice starting rates at 30 per cent. instead of 50 per cent., rising to 70 per cent. instead of 90 per cent. in the final year. That might spark off some initial reaction from the trade unions, but if they realised that it would increase apprentice opportunities they would agree to it. I have spoken to craftsmen and I know that there is a strong feeling that the differential between the apprentice and the skilled man is too narrow.
The Government should abolish the wages councils and let the market fix the level of wages. If the Government are not prepared to go as far as that initially they should at least restrict the activities of the wages councils to workers over the age of 21 or, at least, 18. There is no doubt that wages councils are reducing the number of jobs for young people at a frightening rate.
Unemployment is serious, but there are many anomalies. At times there is some exaggeration of the hardship. Unemployment in the West Country is rising. The Select Committee took evidence from employers in the tourist and catering industries. We were told that such employers still had difficulties in recruiting labour. We visited one STEP scheme where we were told that within three months of its start there had been a 100 per cent. turnover of labour because the first people employed were not prepared to work.
I was impressed by the youth opportunities scheme. When I returned to my home city, which has 11½ per cent. unemployment, I told my managing director that we must play a bigger part in providing opportunities for young people. [Laughter.]
I see nothing to laugh at. Opposition members are supposed to feel sorry for the young people who have not got jobs. The previous Labour Government introduced the youth opportunities scheme. I should have thought that Opposition Members would have welcomed opportunities provided by all employers, even hated Tory employers.
I was surprised to be told by my production director that we had had two opportunities registered for over three months but only in that week had the first applicant come forward. That happened in a town with 11½ per cent. unemployment.
The Government are on the right road but are now at a stage when previous Governments, under pressure, lost their nerve. This Government must not do that. All the pain and sacrifice would have been for nothing. The message I am getting from my constituents is "Go back to Westminster and tell Maggie to stick to her guns". The Prime Minister has already succeeded in lifting this country's prestige throughout the world and throughout Europe. She won a settlement of our budgetary problem that no one envisaged she could get—a settlement that the Opposition when in Government, did not obtain. I ask my hon. Friends to give the Prime Minister, her Treasury team and the whole Government 100 per cent. backing and we shall all reap the benefit in due course. Many of us know it. The people sense it.
I cannot help but feel that the moderate wing of the Labour Party knows that the Government are taking the correct action. They started to take the correct action when in power, but they did not have the courage to see is through when a general election approached. The greatest achievement of this Government, and particularly of the Prime Minister, is that in a short period of a little over a year she has managed to inject into the minds of the people of this country a sense of realism that we have not had for years. People are already beginning to realise that one cannot have more unless one produces more.

Miss Joan Lestor (): How many salaries does the hon. Gentleman get?

Mr. Townend: They realise that the Government do not have a bottomless pit of cash. Furthermore, they realise—

Miss Lestor: Will the hon. Gentleman give way?

Mr. Deputy Speaker: Order. The hon. Gentleman is not giving way.

Mr. Townend: Furthermore, ordinary people realise—

Miss Lestor: Miss Lestor rose—

Mr. Deputy Speaker: Order. We cannot have two people on their feet at once.

Miss Lestor: On a point of order, Mr. Deputy Speaker. Is it in order for the hon. Gentleman to advocate that workers should take a cut in wages without his informing the House how many salaries he draws?

Mr. Deputy Speaker: Order. It is in order for the hon. Gentleman to make his own speech.

Mr. Townend: Thank you, Mr. Deputy Speaker. Opposition Members—

Mr. James Johnson (): Are you aware, Mr. Deputy Speaker, that the hon. Gentleman is saying all these things—these alleged facts—about my constituents? He employs my people in Hull and he talks in this fashion.

Mr. Deputy Speaker: Order. The whole House is aware that interruptions of this kind only prolong speeches and prevent other hon. Gentlemen from making their contributions.

Mr. Townend: Thank you, Mr Deputy Speaker. I am drawing to a close. Opposition Members do not appreciate, and, sometimes I do not think that they understand, the ordinary people of this country, living in this glasshouse at Westminster. Throughout the country, there are people beavering and working away, determined to survive and to be ready for the economic upturn. I visited this week, in the constituency of my hon. Friend the Member for Scarborough (Mr. Shaw), the opening of a new plant costing £1¼ million. It is the most advanced plant in this country for dealing with the blasting, painting and cutting of steel. The plant is so advanced that it is expected


to be exporting, within a year, 30 per cent. of its production. It is a small company that has been developed by two entrepreneurs encouraged by the reductions in taxation and the help this Government have extended to small businesses.
The Prime Minister has shown her faith in these people. They have faith in themselves. I am convinced that when the time comes the vast majority will show faith in our Prime Minister and Government and will send us back here for another five years.

Mr. Douglas Jay (): Whether or not the Prime Minister has raised the prestige of this country, it would be uncharitable not to compliment her on the U-turn over Inmos, even though the Secretary of State for Industry told us three weeks ago that it could not be done, and even though it apparently required a censure debate to enable the Secretary of State to make up his mind. If that is true, we might have some more censure debates. I cannot, however, compliment the Prime Minister on her failure to understand, as it emerged from her speech, how serious is the situation in British industry. She does not seem to have begun to understand. She is the first Head of Government since 1945 to repudiate all responsibility for the level of employment in this country. We now have, for the first time since 1945, a Government who, in almost every branch of economic policy, are following the wrong path. As one would expect, our economy, as a result is nearer to grinding to a complete halt than at any time for the last 30 years.
In the economic controversies of the 1930s I always stuck to the principle that any economic policy that caused unemployment must be wrong. The object of economic policy is presumably that we should produce and consume more and not produce and consume less and employ fewer people. I should therefore like to state briefly and precisely the fallacies from which Ministers' minds are suffering. It is a matter of regret that the right hon. Member for Down, South (Mr. Powell) also seems to be the victim of some of these fallacies.
The first major fallacy is the assumption that it has been a demand inflation rather

than a cost inflation from which we have been suffering in recent months and years. All the doctrines intoned now almost daily about the quantity of money, the public sector borrowing requirement and the rest, are based on the false assumption that we are suffering from a demand inflation. We are not. But at least a certain glimpse of a conversion seems to have appeared. If not a U-turn, there has been a transition in Ministers' minds in the last few months. They have been forced to admit that a free-for-all on the incomes front, including the public sector incomes front, has an effect on price levels.
Secondly, Ministers apparently believe that it is the quantity of money that is directly related to the level of prices. In fact, it is the flow of spending money and not just the quantity of money that influences prices.
The third fallacy is the idea that the expansion of bank credit can be caused only by public borrowing when, in truth, a bank credit inflation can just as easily be caused by private borrowing which increases bank advances. It has been so caused in most of the bank credit inflations since 1945, notably in the great Barber inflation of 1972-73. This particular error leads to the ridiculous conclusion that if the Government borrow money to build a power station price inflation is caused but that if a private firm borrows the same amount for the same purpose no inflation is caused. That is obviously an absurd conclusion.
The fourth basic error that is muddling Ministers' minds is the notion that by some law of nature or theology interest rates must be solely determined by market forces, which usually means, in practice, by the City. But they need not be solely determined in that way. During the war and during early post-war years the Government borrowed what they needed from the banks—incidentally, at 2 per cent.—and told the banks that their private advances must not exceed a certain figure. Bank credit can be rationed by means other than price. I do not say that that should be done now. But if the future of British industry is to be sacrificed for one banking theory or policy, that theory or policy must go.
One reason why all these illusions persist in Ministers' minds—and one noticed this in the Prime Minister's speech—is that


they hardly ever think in terms of economic realities—in terms of output, employment, exports and production—but are instead obsessed with the money economy alone—taxes, bank deposits, borrowing, and all the rest. The Prime Minister hardly mentioned the real economy in her considerable speech.
And so, acting on the basis of all these illusions, in the past 15 months the Government have been deflating demand and inflating costs at the same time. The doubling of VAT a year ago was one of their worst mistakes. Inevitably, that combination of deflation of demand and inflation of costs must generate, as some of us have predicted in every economic debate since the election, an ever-widening spread of closures, bankruptcies and unemployment as all but the strongest producing units find their costs rising and their receipts falling. The Government then call the process a "recession", as though it were an act of God. But it is not. It is the necessary and predictable result, in a modern economy, of the simultaneous inflation of costs and deflation of demand. That description does not apply to this country alone. The present policy is in all essentials just old-fashioned pre-1931 deflation.
In addition, the Government—and this applies even to the wets among them—have not grasped that deflation does not normally stop until something is done to stop it. Every factory that closes means more public spending on unemployment benefit and supplementary benefit. It would be valuable to hear tonight from the Chancellor of the Exchequer the correct figure—if the Minister of Agriculture has it wrong—showing how many thousands of million of pounds of public money are being spent annually on unemployment.
Second, this process means that there is less income tax and corporation tax revenue from companies that are making low profits. In the subsequent round there will be less indirect tax revenue as public spending falls. The public sector borrowing requirement is therefore automatically increased by the Government's own policy. If they then try to stop that happening by savage further cuts, unemployment will as inevitably increase at a headlong rate. Meanwhile, as a result of all this, productivity must of course

fall as output over the economy as a whole drops. In addition, the fact and fear of unemployment will intensify restrictive practices throughout a large part of industry. We suffered for 20 years after the 1930s from restrictive practices caused by the deflation of those years, and we shall do so again.
Therefore, this policy, quite apart from all the social evils that it creates, is seriously damaging productivity and is encouraging new restrictive practices throughout the economy. We have now reached the point, in my view, where serious long-term damage is being done to British industry and. incidentally, to the future of defence policy and security in this country because of the mutilation of the steel and shipbuilding industries.
But it must also be understood—and some of my hon. Friends particularly must understand this—that there can be no expansionist policy without some effective incomes policy.

Mr. Robert C. Brown (): Why is that?

Mr. Jay: To pretend that there can be is almost as much an illusion and as foolish as those that are now misleading the Government. With an agreed incomes policy and reasonable restraint we can get back to the path of full employment, higher productivity and real growth and expansion all round, because cost inflation would then be curbed. But if public spending is expanded without an incomes policy, price inflation of 25 per cent. to 30 per cent. will return within two years.
My hon. Friend the Member for Newcastle upon Tyne, West (Mr. Brown) asked why there is a need for an incomes policy. The reason at the root of this controversy is this: if costs are rising in money terms faster than production over the whole economy, either demand is allowed to rise equally fast, in which case prices must rise, or it is not so allowed, in which case unemployment must increase. There is no escape from that arithmetical dilemma, if costs over the economy as a whole are rising faster than output.
It is not true, however, as is often said, that price inflation creates unemployment. What it does do is to put Governments in a position in which they either have to allow price inflation to continue or create unemployment in order to stop it.
But of course there is a constructive alternative policy. I state it briefly, First, the Government should reduce interest rates and thereby lower the exchange rate of the pound, thus removing at least the present intolerable pressure on our export industries. If it is necessary to correct excessive credit inflation resulting from lower interest rates, bank advances must be rationed, and that is perfectly possible.
Secondly—and on this all else depends there must be a recreation, in spite of all the difficulties, of a long-term agreed incomes policy. And some authority must be established as a last-resort tribunal to operate it. Most of the successful economies in Western Europe are today operating some sort of effective incomes policy.
Thirdly, all import restrictions must be removed from food supplies into this country from anywhere in the world. That will help to keep down our labour costs. At the same time, we must impose on all manufactured imports, from wherever they come, at least the same GATT tariff as we now impose on manufactured imports from non-EEC countries; supported by quotas, as my right hon. Friend the Leader of the Opposition said today, on endangered industries such as textiles. It is absurd for the House to argue about import policy in simple terms, such as being for or against import controls in the abstract. What matters now is which sort of restraint we impose on which imports. I believed that in 1972 we could have joined an industrial free trade area as members of EFTA. But too much damage has been done since then, largely by the effects of the common agricultural policy on our costs, for the British economy to stand that for a good few years now.
Having established these essential safeguards we must then embark upon a steady expansionist Budget policy. By these means together, but not otherwise, I am confident that we can return to full employment, growth and rising standards.

Mr. Matthew Parris (): So much of what I wanted to say has already been said by my right hon. and hon. Friends. Therefore, I shall be fairly brief and limit my remarks to subjects of a general nature.
It is a privilege to follow the right hon. Member for Battersea, North (Mr. Jay). He is more learned than I. His erudition is such that I should be very unwise to try to follow his arguments or respond to them off the cuff.
I am not an expert in economics. I do not know a great deal about horticulture. I have never been Chancellor of the Exchequer. However, I once had a pot plant. Somebody gave it to me when I was at university. When I first had it, it flowered very effectively, as it was supposed to do. After a while the blossoms wilted and I wondered what one did. Someone recommended a proprietary product which I think was called Baby Bio. I bought a bottle of this stuff and administered a couple of drops, as the directions required. Immediately the plant burst into blossom. There was a profusion of blossoms for a couple of days, but they seemed to wilt rather earlier than the previous blossoms had done. Ignoring the maker's instructions, I put on four or five drops of Baby Bio. Again, there was an almost frenzied profusion of blossoms, but this time they wilted even more quickly. I had to put more and more of this product on to the plant to keep it blossoming. Eventually I realised that it was hooked on the stuff and that withdrawal from it was the only solution.
I realise that the Government are now obviously tempted by the thought of what I might call the Baby Bio solution to our political and economic difficulties. I accept that to follow a sharply deflationary policy at a time of international recession is painful in the short term. I support the Government's policy 100 per cent., but I accept that in the short term it is painful. It is the response of a country which believes that it is cornered and senses that there is nothing for it but to turn and face the problem.
In any such endeavour there will always be a time when the costs have become apparent to people but before the fruits are tasted. Despite the optimism of some of my right hon. and hon. Friends, I think that it will be some time before we emerge from this stage—that is, the stage that we are in at the moment. However, we know of so many examples in our personal and political lives of people who have turned back at just the point when they should have carried on.
I believe that we shall win through and that, when things do begin to come right, the air will be thick with the cries of enthusiasm—the new-found enthusiasm of erstwhile doubters. We shall not be able to see the bandwagon of my right hon. Friend the Prime Minister and her Cabinet for those who previously lagged behind but who will then be trying to clamber on it. She will not need them. I say to Government supporters and, through you, Mr. Deputy Speaker, to a wider audience, that she needs, and will get, our support now.

Mr. Ron Lewis (): I hope that the hon. Member for Derbyshire, West (Mr. Parris) will forgive me if I do not take up all the points he made. I believe that he represents Derbyshire, West. The bandwagon to which he referred will start to roll in Derbyshire with the county council elections next year—I live in the county—when the people of Derbyshire will, once again, revert to a Labour-controlled county council.
Having said that, I wish to refer briefly to the area which I represent. I turn to Cumbria and my own constituency of Carlisle. The people in that part of England seem to think that they have been completely forgotten by Governments of all political persuasions here at Westminster.
At the last general election the question of unemployment was one of the major platforms for Labour speakers in the county. Some of us envisaged that, in the event of a Conservative Government being returned, unemployment, bad though it was even under the Labour Government—which some Labour Members of Parliament strongly deplored at the time—would get worse. We from the political hustings envisaged that if the Tories were returned there would be a steep rise in unemployment in my part of the world.
We have had unemployment in West Cumbria since the 1930s. My hon. Friend the Member for Workington (Mr. Campbell-Savours) can elaborate on that better than I. Throughout the county of Cumbria in the 1930s, especially in the West, there was ravaging unemployment. Carlisle, I understand, was not subject to the ravages of unemployment

in the 1930s as much as the western part of the county. Unfortunately, that position has changed considerably. In the 1930s we had not experienced the rundown that the other parts of the country had. I am sorry to say that the present story in my part of the country is typical of that in other parts. It is a very sad story of people being thrown out of work almost week by week.
At the general election my Conservative opponent attacked me bitterly because the Labour Party suggested that unemployment would rise under the Tories. This is what he said:
It is, therefore, especially shameful that Labour politicians during this election should have the temerity to suggest that Conservatives would bring about higher unemployment.
All that the Labour Party forecast at the general election has now taken place and is, I regret, a reality.
We could not get postmen in Carlisle 18 months ago. In the city of Carlisle, I am given to understand, there were four vacant jobs last week, with 256 applicants for them. We experienced that in other parts of the area in the 1930s. However, we had a large number of small family firms. Those firms have now been merged into great companies. What has happened? Since the general election there has been in my city an increase of nearly 60 per cent. on the unemployment registers. To me that is very sad indeed.
Thanks to the Labour Government, we encouraged textiles to move to Cumbria. Courtaulds came to Cumbria, in the constituencies of my hon. Friend the Member for Workington and myself, and built brand-new factories. The workers did not demand excessive wages. Nor did they go on strike. But what was the result? Courtaulds closed both factories in Cumbria, with the loss of 800 jobs. That loss was not reflected in the unemployment figures issued last Tuesday. They will be reflected in the next set of figures because the men will be given a certain payment some time towards the middle of next month. In no part of the United Kingdom can the textile workers be accused of demanding excessive wages. Textile factories are being closed. The numbers on the dole queue are increasing.
There are light engineering companies in my constituency that are associated


with the motor industry. Those companies are feeling the draught. A company that manufactures seat belts had to put a number of its employees on the dole only the other week.
I have had a conversation with the general manager of the Pirelli tyre company in my constituency. I do not want to misquote him, although he canvassed against me during the general election. As a good Methodist I want to be fair to him. I spoke over the phone to the general manager and asked him about the position of his company. He told me that it was grim. He said—I paraphrase—"We are only just managing to tick over, and we are not making any money."
Part of the food industry is in my constituency. It handles a great deal of food, some of which is sent to London. The management is not taking on school-leavers as it once did.
I hope that the House will forgive me for dwelling on the situation within my constituency. I was sent to this place to represent my constituents, and that is what I am trying to do.
The outlook is grim. Job prospects are extremely limited. The local trade union leadership in Cumbria envisages a sharp rise in unemployment. A few months ago it met the Cumbrian Members of Parliament. Among those present was the deputy leader of the Government, the Secretary of State for the Home Department, the right hon. Member for Penrith and The Border (Mr. Whitelaw) I am sorry that he is not in his place now. Also present were my hon. Friends the Members for Workington and for Whitehaven (Dr. Cunningham). We listened to what the trade union leaders tried to impress upon us. They spoke of Cumbria's future in terms of unemployment and painted a grim picture.
The Home Secretary, who is my parliamentary neighbour, undertook to raise at Cabinet level some of the complaints that had been voiced. I do not know whether he did so. I am not saying that he did not. Having listened to the Prime Minister, it seems that there is only cold comfort for Cumbria.
Cumbria is nearly 70 miles from Newcastle and almost 100 miles from Manchester. It is tucked away in the North-West. It seems to be forgotten by

politicians. I hope that the Minister of State, Treasury will convey my observations to the Cabinet. I tell him that something must be done for Cumbria.
In the days of the depression, and since then, young people have had to leave the county. Many of them have never returned. In Carlisle 4,150 are out of work. The statistics are well above the national average. I hope that the Government will reconsider their policy and try to do something to assist the area's unemployment problem.
Those of us who were fortunate enough to be in this place during the previous Parliament listened to the present Prime Minister speak from the Opposition Dispatch Box. I am beginning to wonder whether she has a Jekyll and Hyde character. That which she said when in Opposition bears no resemblance to her statements from the Government Dispatch Box.
If what is happpening now were happening under a Labour Government, I shudder to think of the headlines which would appear in our national press. However, I must be fair to my local Tory paper. It has exercised a little responsibility compared with many of the national newspapers.

Sir Brandon Rhys Williams (): During the general election campaign the Conservative Party made it abundantly plain that if a Conservative Government were elected they would follow policies of orthodox economic management, prudent control of credit, the setting free of individuals to pursue their best interests, and cutting out waste in the public and private sectors. It is not suitable for the Opposition to complain if that is what the Government are single-mindedly doing.
But it is not enough merely to know precisely where the North Star is; the Government must be able to take the ship of the British economy round the underlying rocks. Now that a year has passed, it is appropriate to make some criticisms and some recommendations, which I hope will be helpful.
The Treasury and the Bank of England seem to be taking a rather supine view of what is probably only an artificial and temporary situation: I cannot believe that the present very high exchange rate


for the pound is a permanent and inevitable economic feature.
The Bank of International Settlements published an interesting annual report in Basle last month. I would like to quote two passages. It stated:
Countries in which the price level increases persistently faster than in their main trading partners, cannot, over the longer run, avoid depreciation of their currencies.
Later in the same report it observed:
Inflation being a common malady will have to be fought by means that do not bear the taint of competitive currency appreciation.
I realise that there is a tremendous amount in the argument that the exchange rate is settled by market forces. Obviously that is true. However, the economists advising my right hon. and learned Friend the Chancellor of the Exchequer may have a little more to learn about foreign exchange than they realise.
That rate of exchange established by the market is not merely a mechanical response to forces outside the control of the authorities, as we saw during the years under the Bretton Woods agreement. At that time we had fixed exchange rates for long periods but we were able to vary the rate of interest. Surely it ought to be possible, if we choose to do so, to adjust the exchange rate now without necessarily making corresponding interest rate changes.
Political decisions can have a direct and sometimes dramatic effect on the rate of exchange. I shall give the House one or two elementary examples. If my right hon. Friend the Prime Minister were to make a shock announcement in the next Queen's Speech that provision would be made for the Government to repudiate the national debt, that would have a dramatic effect on the rate of exchange. That is so unlike my right hon. Friend that it can be regarded as a laughable example.
I shall take another example that is not quite so far-fetched. Let us suppose that Scottish devolution had gone ahead and that by now the Scottish monetary authorities had decided to follow the Dublin authorities and to separate their pound from the English pound. I do not know what effect that would have had on the Scottish economy. However, one can well imagine the English pound dropping to £1·80 or £1·70 to the dollar without

the benefit of the main part of North Sea oil revenue.
The Government of the day would be saying "This is the response to market forces and nothing can be done about it." We should be revelling in the tremendous strength of our car industry. We should be acknowledging the prudence of British people in not being attracted to imports. We should be enjoying wonderful success in export markets. Our steel industry would not have to face closures. All that would have its disadvantages, probably, in the form of rapidly rising inflation.
I am not recommending that we should try to Balkanise our currency system even more. The one lesson that we must learn—and should have learned following the breakdown of the Smithsonian settlement—is that the experiment with national—one might say ethnic—paper currencies has proved a failure. Perhaps we should have known that it would prove incompatible with democratic interventionism in a dangerous world. We all have an increasing longing for some central element that will be a store and a measure of value, such as the old gold standard. We do not want to return to that; but the spectacle of national Finance Ministers with their central bank governors in tow, each running their own little paper currency, is unconvincing. The disposable tissues that we use for paper currency, without any solid backing, are perishable and are not the substantial element that we need to make capitalism a success.
I should like to go in the other direction, towards consolidation of paper currencies. That is why I regret that we did not join the European monetary system when we had the opportunity. We should have found a means to join. We should have continued with the negotiations until the system was in an acceptable form. We could still open discussions to find a way to attach the pound to the European monetary system. By doing so, we could enlist the support of other central bank governors instead of the complete indifference that they are now showing.
We are in a strong position to open such negotiations because my right hon. and learned Friend the Chancellor of the Exchequer showed splendid courage last year, when he rightly dismantled the controls on sterling capital movements. But he did not follow up that initiative, which


he should have done. He should have approached the other member States in the Community, and also other countries, and suggested that they, too, should dismantle their controls on the movement of capital. Then we could have started to create a European market for capital—an integrated European market for credit. I am thinking not only of the market for the currencies but of a truly integrated economic system taking in the commodity markets, the stock exchanges, insurance, private and corporate finance and even Government borrowing.
Suppose there was a tremendous new oil discovery in Texas—something beyond even the wildest dreams of American oil millionaires. That would not raise the Texas dollar against the remainder of the United States because Texas is now completely integrated with the American monetary system. So, too, for the pound. Our object should be to arrange for investment in London to be diffused throughout the European system, so that the pound could enjoy the advantages of belonging to a large economic system, such as that in the United States.
I wish to deal briefly with interest rates. For the success of the capitalist system business men must be able to take long-term decisions that prove right. The Government owe them a background of stability and predictability, as far as ever possible, about such vital matters as the interest rate over a long period. In that way they can provide a favourable climate for investment. My right hon. and learned Friend was right last year to increase the rate of VAT. I know that many people do not agree with that. But once again, he stopped half way. He was trying to discourage consumption, but he did not do enough to promote investment.
I wish to make a specific recommendation on that matter. The Government should encourage the growth of what we might call guaranteed dividend stocks to finance the public sector, and in due course similar things could appear in the private sector as well. I have not used the normal phrase "indexed stocks", because it has double meanings. My right hon. Friend the Prime Minister said that we must not simply adjust to inflation. I agree with that; but I do not accept that a guaranteed dividend stock is a form of adjustment to inflation. It is the opposite.

It means that the enterprise is making a commitment to reality—something akin to a gold clause—expressed in terms that the enterprise can undertake confidently from its own resources, whatever the economic conditions.
I shall give the House two examples of that. The Severn barrage should be undertaken quickly, and its development speeded up. To pay for it I believe that the Government might have to issue a large tranche of guaranteed stock, with the dividend expressed in kilowatt-hours rather than in paper currency. The Channel tunnel project has been stalled because of financial troubles and not for any other good reason.

Mr. Ron Lewis: Mr. Ron Lewis rose—

Sir B. Rhys Williams: I shall not give way, because I do not wish to speak for too long and I still have some specific recommendations to make. The Channel tunnel project could raise the necessary finance if it issued a dividend guaranteed in terms of transport per ton-mile. Whatever happened to the pound, it could satisfy its commitments to investors.
On the subject of efficiency, it is a failure of the Government that they have not done enough to promote efficiency. In the public sector that is a difficult undertaking. I should prefer to see reductions in numbers, not the underpayment of surplus manpower. There is a large amount of surplus manpower in our Ministries and public institutions. As a simple slogan I offer the idea "The dissolution of the Ministries". We need to think about reorganisation on a very large scale—something that would change the whole nature of Civil Service recruitment, training and promotion, and that would involve massive early retirements, especially in the older and senior levels—something on the lines of the Haldane reforms of the Army.
Shock treatment is not appropriate in the private sector. Indeed, if something like that was needed, it has now gone far enough. There are more ways to boil an egg than by taking it straight from the refrigerator and plunging it into boiling water. If one does that there is the likelihood of breaking the shell and losing the goodness. Private business has undergone shocks in the past few months, and other methods could be tried. For instance, there is the transferability of pension


rights. If the executives in private sector schemes were free to make their own ways to the companies that they thought were likely to grow and to provide them with their best opportunities, it would help to promote efficiency by the pressure of people voting with their feet. That cannot wait until next year or the year after. Thousands of people are losing their pension rights this year. The Treasury civil servants in charge of these matters, enjoying their own highly privileged indexed pension schemes, should be willing to do something quickly to help those losing their pension rights in the private sector.
I should like non-executive directors to be appointed to the boards of public companies. That would have a tremendous disciplinary effect. It could be done without any outside interference in the company's management. It would strengthen the supervisory element within the company without introducing Civil Service pressures, or anything else. We should welcome the fifth directive in its modified form. Personal details of candidates for directorships should be circulated in advance of meetings, thereby putting the institutional investor in a much stronger position to exercise discipline over the choice of directors and their reappointment.
I wish to make some brief suggestions about changes in company tax, which I believe are overdue. My right hon. and learned Friend the Chancellor promised to introduce in the last Budget changes in capital taxation, but he did not do so. It would be advisable for him to announce his intentions as soon as possible—not waiting for next year's Budget—and the changes should take effect from the date of the announcement.
On the question of tax treatment of stock, we need to change the balance of taxation. At present it tends to assist retail companies rather than manufacturing concerns. I would like, too, to suggest ways to reclassify the capital structure of companies to encourage even those with low profit margins to raise fresh capital by a type of dynamised debenture, which would rank as prior-charge borrowing for tax purposes, but with dividends related to value added, or to the turnover, rather than to profit. I notice that this is one of the recommendations of the Wilson report.
Lastly, I suggest that we might seek to extend the tax concessions which encourage the build-up of pension funds and give similar encouragement to companies to build up funds for retraining of their employees and for company reorganisation.
I have spoken for longer than I intended. I hope that my specific recommendations will include some points which the Government will recognise as helpful and which they will be willing to implement. Opposition Members must admit that the Prime Minister has won the tremendous support of the nation by her courage, single-mindedness and integrity in pursuing the objectives which she believes to be right, and which the nation in its heart knows to be right. She has won the support of the nation. She deserves the support of the House.

Mr. Donald Stewart (): I hope that the hon. Member for Kensington (Sir B. Rhys Williams) will forgive me if I do not deal in detail with his speech. I was interested in two of his ideas, although I accept that he mentioned them as examples. I refer to the abolition of the national debt and the separation of the Scottish pound from the English pound. If ever the hon. Gentleman manages to introduce Private Members' Bills on both of those issues, he will have my enthusiastic support. I was much more interested in the speech of the hon. Member for Bridlington (Mr. Townend). I was surprised, because judging from his speech he is the type of Tory who I thought had long become extinct. He talked about teachers giving pupils inflated ideas of themselves. I thought that he was about to go on to the medieval prayer which teaches us all to keep our stations. When the hon. Gentleman talked about the country facing the economic facts of life, he reminded me of that section of the population to which Abraham Lincoln once said "The aim of the few is to say to the many 'You work and earn bread and we will eat it'." That seems to be the sort of economic fact of life which the hon. Gentleman has in mind.
The right hon. Member for Down, South (Mr. Powell) dealt in great detail with the restriction of public expenditure, which some hon. Members thought was rather odd in the context of Northern


Ireland. The right hon. Gentleman, or any other hon. Member from Northern Ireland, need make no apology for any help that Northern Ireland receives. I should say right away that I am demanding aid for Scotland and my own constituency, but I also support the general principle for the whole country.
Despite all the economic theories which we have heard today, the fact is that the previous Labour Government—and they were not without blame with regard to unemployment—pumped in money to keep unemployment down. In addition, inflation was only a half the figure that it is now. That is a historical fact which transcends all the economic theories which Conservative Members can put forward.—[HON. MEMBERS: "It was delayed effect."] Whatever it was, it is a fact.
When the Prime Minister entered into high office she quoted St. Francis of Assisi. We heard such phrases as "sowing peace and harmony", and all the other laudable aims of the Saint's prayer, but we must now live with the realities of this Government. Surely, that must be the greatest ever contravention of the Trade Descriptions Act, because this is one of the most divisive Governments of modern times. They have no mandate from Scotland and they received a popular vote of less than 40 per cent. from the United Kingdom as a whole. They have proceeded on a trail of reaction and disaster which could well turn out to be irreversible. We may be passing the point of no return for the United Kingdom's industrial base, and may be sowing bitterness that will not be eradicated.
The soaring unemployment figures may not cause this Administration great concern, but one would have thought that the plight of businesses would have given rise to some anxiety. Many firms are folding up. As the hon. Member for Carlisle (Mr. Lewis) said, many of them met all the criteria which the Prime Minister said were essential if they were to succeed, such as low wages and increased productivity. They even stayed open on the TUC day of action. They met the magic formula, if that is what it is, yet they have gone to the wall and have folded up along with the rest.
In Scotland, company liquidations have jumped 43 per cent. in the first six months of 1980 compared with the same period last year. There have been 1,544

winding-up orders in the first six months of this year, compared with 928 in the same period last year. Mr. Robin Duthie, the chairman of the Scottish Development Agency—an appointee of the Government—has said:
I have heard it said that when London sneezes, Scotland gets the flu, but I think I can safely say that some parts of West Scotland are getting pneumonia".
The chairman of the Scottish Council of Development and Industry has accused the Government of asset stripping because of their failure to invest North Sea oil revenues in industry. The small businesses—I shall not go into detail, because of tomorrow's debate—must be even more disillusioned with the Government's actions.
I turn to unemployment. Appalling though the figures are, the Fraser of Allender Institute estimates that, in December, in addition to increased figures for adults, there will be an additional 40,000 school leavers in Scotland to be added to the register. That is an appalling figure in itself, and in spite of the high figures that existed back in the 1930s, we may find that people today are not prepared tamely to tolerate such figures. That is something which, in the present climate, the Government should bear in mind.
In June, Scotland lost 5,000 manufacturing jobs. The Government have said that Scotland must get into the microprocessing business. However, of the grants already approved, only 2.5 per cent. have come to Scotland against 60 per cent. for the South-East of England, a trend which encourages firms to set up in the South-East. The Government's answer to the unemployed is "Move house to somewhere else". Scotland and other parts of the United Kingdom have long been told to walk tall in Australia, Canada or elsewhere. But the net emigration loss of 2,000 in 1974 became 18,000 in 1979. Where is the work which the Prime Minister suggests could be found? Even if it could be found, it is grossly insulting that people in settled homes—many of whom boast of the length of time their families have been in possession of such homes—should ask working people to become industrial nomads travelling the face of the land. As I have said, even if they did so, the work does not exist.
The Government are found guilty on consumer prices. In the first four months


of 1980, prices in Scotland rose by 8.3 per cent., the highest rise in the United Kingdom. The record is also shocking in respect of assistance to the poor and disabled. The Government are carving up the assistance which has been given to the less fortunate members of our society. A Minister in the Department of Health and Social Security wrote to me this week:
It would not be right to exempt the deafness group or any other client group from the effects of the campaign to produce a streamlined and more efficient Civil Service.
What consolation for the deaf and those who are otherwise disabled! Their sacrifice will produce a more streamlined Civil Service. What a load of codswallop. There is plenty of room for cuts in the defence budget. The Government propose to spend the lunatic sum of £5,000 million on defence. There is plenty of scope there for cuts, and the country could still be amply defended.
The Government are prepared to pay out £7,000 million in unemployment benefit. As for the free enterprise zones announced by the Prime Minister today, that is soup kitchen planning and nothing else. As well as being a failure, the Government represents a dangerous conspiracy against the people of the United Kingdom, and I shall have great pleasure in voting for the motion tonight.

Mr. Robert Taylor (): This censure motion specifically refers to unemployment and the problems facing industry. To that extent it is timely, because no one could disagree with the statement that unemployment is unacceptably high and that industry faces many problems. However, the motion is directed against the wrong target. In my view, it should be directed against every Government who have held power since that day, some 22 years ago, when the right hon. Member for Down, South (Mr. Powell) and two of his right hon. Friends resigned from the economic team.
Since that date, successive Governments of both parties have weakly accepted short-term expediencies, and have thereby created a long-term catastrophe. That catastrophe is with us today. The day of reckoning is now here. It would be comparatively easy to listen to yesterday's men—to some right hon. Members on the

Labour Benches and to some of my right hon. Friends—who took part in our recent economic debate. They have suggested that we should reverse our policies and take steps such as those that have been taken during the last 22 years. They are responsible for our present position. It is an effrontery for them to suggest that my right hon. Friend the Prime Minister should take similar steps.
There is no hon. Member who does not understand the Government's strategy. By refusing further to devalue our currency the Government will create a more competitive Britain, with a stable currency and full employment. There may be some faint hearts on the Government side of the House, but at least they seek success for those policies. By contrast, there are some Labour Members who have a vested interest in the failure of those policies. I have news for the faint hearts and the knockers. Just as the severity of this recession came quickly, so will the recovery come quickly. I am not claiming that we have reached the lowest point yet, but already there are signs of success.
As the House knows, I am involved with the building materials industry. All the products that I sell are made in the West Midlands, and thus create and generate employment there. Regrettably, one of the main manufacturers—a public company—has had to make a third of its labour force redundant because of a shortage of orders. The managing director of that company, who was at the House last week, asked me what I thought would be an anticipated price increase on the products this year. I said that I did not anticipate that it would be very high but that I should like to know. He said "I have good news. For the first time in 17 years it is unlikely that there will be any increase, because we have found that we can produce the same volume with two-thirds of the labour force. The high pound has kept the cost of raw materials stable". When I sell those products abroad during the Summer Recess I shall find it easier to sell them at the same price at which I sold them a year ago in Saudi Arabia, Kuwait and Bahrein because our competitors are increasing their prices. That is a sign of the success of my right hon. Friend the Prime Minister's policies.
In addition, I am chairman of the building materials export group, which is


responsible for a substantial amount of exports, and the same story was told by many Midlands manufacturers at its annual general meeting two weeks ago. We must look to small and medium-sized companies because they have the greatest prospects. The taxation changes that took place a year ago have motivated the management. If Labour Members want evidence of that, I refer them to the evidence that was given recently to the Trade and Industry Sub-Committee of the Expenditure Committee by Lord Limerick, chairman of the British Overseas Trade Board. In answer to a question from the hon. Member for Stockport, South (Mr. McNally) he said:
You cannot generalise. In the dullest sectors there are shining examples of success and I may quote a fairly recent one: a manufacturer of woollen worsteds from North Yorkshire to whom I was talking told me, when I asked him 'What has happened to the price of your product in Japanese yen landed in Japan?', 'It has gone up 52 per cent. in 12 months'. I then said 'What has happened to your sales?', and he said 'I have doubled them' … If I may take time for one more brief example, I have just returned from Hong Kong. The fact that phase one of the mass transit system, the underground railway, opened last month ahead of time under budget and that a high proportion of it was contracted from Britain, has absolutely transformed British reputation, not only in Hong Kong but in a good deal of that part of Asia. The message is we are back on the map.
That evidence was reflected by the industry in which I play a small part. I ask those who criticise the Government for the high exchange rates to look at our exports. For the past two successive months they have been in the black, in spite of the high exchange rate. The volume of exports has risen. Labour Members should be pleased that British exports are successful, and they should not knock that success. High interest rates will obviously come down for the right reasons, not because of pressure from either side of the House, but because the money will be available and the Government will not be demanding such a high proportion of it.
As a Government, we must be careful to watch wages in the public sector. If they get too high, private industry will have to follow suit, and we shall lose the price competitiveness that we have built up recently. If hon. Members would like an example of what I mean by high wages, I quote from an advertisement in the Evening Standard which appeared

on the day that the unemployment figures were announced last week. If hon. Members take it seriously, they will be as worried about its implications as I am. The advertisement reads:
Over £3,500 p.a. for a 3 day week! Kids leaving school? Bored at home? You can earn £3,517 pa for 3 full days a week as a Part-time Finance Assistant.
That advertisement was placed by the Thames Water Authority. If a pensioner reads that advertisement he will be extremely angry, because it is a ridiculous amount of money to offer to a person leaving school. If Labour Members think that that is justifiable, they are encouraging unemployment. That sort of advertisement must encourage unemployment, because the private sector is not able to compete.
If any Labour Member who votes in favour of the censure motion tonight arrived at the House in a foreign car he should remember the remarks of the hon. Member for Carlisle (Mr. Lewis) who complained about the seat belts factory in Carlisle. He complained about the problem of Pirelli in Carlisle. Any hon. Member who votes for this censure motion tonight, having arrived in a foreign car, will be acting in a most hypocritical manner.
I repeat to the Government the message which has been voiced by many of my hon. Friends: keep a steady nerve; we shall win the battle over inflation and unemployment and Great Britain will be a better country.

Mr. Norman Atkinson (): I am not sure whether we should congratulate the hon. Member for Croydon, Northwest (Mr. Taylor) on arriving at the House of Commons in his Rolls-Royce.

Mr. Robert Taylor: It is British, and I am proud of it.

Mr. Atkinson: It is undoubtedly British. I understand that the hon. Gentleman's remarks were directed towards hon. Members who drive around in other than British cars, for the House of Commons car park seems to be littered with products from overseas.
The one shining aspect about which the Prime Minister spoke—at least in her considered opinion it was shining—was the enterprise zone. That rag and bone


and scrap metal idea being developed by the Government as a kind of economic salvation means that we have to get back under the railway arches to find work. We are not to sleep there, as my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said, but to work there. The solution being put forward by the Government is to work under railway arches, in garden sheds and other temporary buildings in city centres to develop their rag and bone and scrap metal idea. That epitomises the Government's attitude towards economic recovery and growth in this country.
I am glad that the right hon. Member for Down, South (Mr. Powell) has returned, because I should like to comment on his contribution. If the debate marks nothing else, it should mark the end of the sweetheart arrangement which Opposition Members have had in their undue adulation of the pseudo remarks—indeed, the pseudo intellect—of the right hon. Gentleman from time to time. One of the Labour Government's weaknesses was the regard that they paid to the right hon. Gentleman in adulation or otherwise. None the less, it will cost us many seats at the next general election. That is the price that we paid for this conspiracy of silence during previous contributions by the right hon. Gentleman.
The right hon. Member for Down, South has an obsession with figures. As he talks about immigration figures, so he talks about the public sector borrowing requirement in almost the same breath. He has an arithmetic obsession, as though it is meaningful in these debates. He gives no reasons in support of his contention that what he calls an excessive borrowing requirement is a direct contributory factor to the creation of price inflation.
I think that I am justified in saying that the right hon. Gentleman in debates behaves as an unprincipled punter. He attempts to back every horse in the race, or whichever suits him at the time. But he is the chief beneficiary of public expenditure, taking possibly the largest share of the allocation of resources.

Mr. R. C. Mitchell (): Too much.

Mr. Atkinson: It may be too much. But he should not denigrate the method

of allocating those resources when so much is crucial in Northern Ireland and in other weakened areas of this country. [Interruption.] The right hon. Gentleman denies denigration, but that is precisely what he does in his contributions to these debates.

Mr. J. Enoch Powell: Mr. J. Enoch Powell rose—

Mr. Atkinson: I shall not give way. I shall treat the right hon. Gentleman in the same way as he treated me.

Mr. J. Enoch Powell: Will the hon. Gentleman give way?

Mr. Atkinson: I certainly shall not give way. One of the reasons why I reject the right hon. Gentleman's arguments as economic imbecility is that the inflation problem is cost-led, not wage-or demand-led. There is a great argument as to how inflation has come about. The greatest contributory factor in recent years has been the price of oil—energy. The Government have pursued a deliberate policy of pushing up the cost of energy to industry as part of their organised slump factor which they describe as inevitable. The Prime Minister says that it is inevitable. It is nothing of the kind. It is the deliberate step by step policy of the Government to organise a slump.
On the one hand, we have a boom in the City, the like of which has not been seen in post-war years, and, on the other hand, an employment slump. [Interruption.] Conservative Members deny it. But in the past 12 months the finance houses in the City have cleared £2,500 million in sheer profit at a time when unemployment is approaching 2 million. What sort of morality is it when we put side by side the boom in the City and the slump in our industrial areas? Is not that a condemnation of the policy now being pursued of one law for the City and another for industry? What is now taking place is a direct result of that attitude during post-war years.
The remedial measures suggested by successive Governments have always been oriented towards the City because the nation has depended on that sector to make up the shortfall in our visible trade. Therefore, manual and industrial workers have always taken the brunt of the problems that this country has suffered. That is the situation. The record of post-war years is there to prove it. The reason why we are so much further down the


track of slump than our Continental competitors is that we have been oriented towards the needs of the City when Governments have introduced remedial measures.

Sir Ronald Bell (): Will the hon. Gentleman give way?

Mr. Atkinson: No. I have only a few minutes. I certainly shall not give way.
Our inflation is caused by cost, not demand. That is why we should be talking about the control of prices first, not wages. We should forget this idea about public expenditure being the root cause of most of our problems.
I will list what we are debating and what we are protesting about—first, high unemployment; secondly, high interest rates; and, thirdly, high exchange rates.
It is because of high interest rates that we now have this boom in the City. The finance houses have never before creamed off so much in ill-gotten gains from the country as now. That is an element of class politics that we ought not to forget.
The Prime Minister now says that high exchange rates are inevitable and that our economy can do nothing about them. They make exports more difficult and encourage cheap imports. That is the result of the economic non-interventionism being practised by the Government.
I want to make only one analysis about industry and it concerns engineering. I refute the idea that is floating about that wages are the root cause of all our problems. In recent months, I and several others have done some detailed research into the engineering industries. They have taken the brunt of the Government's policies. Mechanical engineering has suffered the greatest number of industrial casualties in the past three years. That industry has lost 254,000 workers. One must add to that figure the 6,000 workers that have lost their jobs in instrument engineering and the 23,000 workers who have lost their jobs in electrical engineering. That makes a total of 283,000 workers. To that figure one must add another 43,000, comprising 20,000 from vehicle engineering and 23,000 from shipbuilding.
A close analysis of why those workers have become casualties is illuminating when considered in relation to the Government's arguments. All of those casualties involve low-paid workers. The most

buoyant sections of engineering are the highest paid sections. Those two aspects naturally go side by side. Where there is buoyancy there is employment and high wages. People are not pricing themselves out of jobs, and that lie should be nailed as securely as possible.
As I have said, 326,000 engineering workers have become casualties during the past three years. The majority of them were made redundant as a result of some form of rationalisation. Another reason for redundancies is the amalgamation of companies. Wherever there has been weakness there has been low pay. Workers have not gone for the kill, as Conservative Members say. They have not pushed home their bargaining muscle or gone for high wages. That is why they have become casualties. Analysis proves that.
The Leader of the Opposition was right to say that from April 1977 to April 1978 the increase in the retail price index equalled 8½ per cent. In 1978–79 the increase equalled 10 per cent. From April 1979 to April 1980 there has been a 22 per cent. rise. What caused that inflation rate of 22 per cent.? It was not wage led. It could not have been wage-led, because wages were limited to 13½ per cent. during that period That should not be thought of as a contributory factor to the inflation rate of 22 per cent.
If one analyses manufacturing industry, one realises that redundancies cannot be blamed on high wages. Workers are not pricing themselves out of jobs. If our unit costs are compared with those overseas, we see a different picture from that projected by the Government Front Bench. Once again, they have tried to make scapegoats of industrial workers. The Government imply that they are taking a greater share of the cake and that they are not entitled to that share.
What has happened since January 1974? The record is there for all to see. The living standards of wage earners are now less than 4 per cent. higher in real terms than they were. If one section of society has taken a bigger share of the national cake, a finger should be pointed at the City. A handful of finance houses and banks have creamed off £25 billion in 12 months. It is they who are sucking the economy dry and they who are taking more than their share, not wage earners. I hope that we can put a stop


to the constant accusation that trade unionists are using their bargaining power to such an extent that they are pushing people out of work. That is not true. Those who utter such remarks should come to the Dispatch Box and illustrate where such practices take place. If they wish to continue making such accusations, we are entitled to some detailed explanation of where those practices occur. If they cannot give us such an explanation, they should shut up.

Mr. Michael Ancram (): I am glad to have the chance to speak briefly in the debate. I hope that the hon. Member for Tottenham (Mr. Atkinson) will forgive me if I do not answer his points. If Conservative Members spent their time responding to the different policies put forward by Opposition Members they would find themselves with little time to support the policies of Her Majesty's Government.
I speak in support of the Government, in particular, because I come from Scotland. Scotland has special problems. The Government have genuinely set out to solve those problems. In expressing my confidence in the Government, I believe that I express the confidence of large numbers of Scots. Obviously, things are hard in Scotland at the moment. However, that is no surprise. No realist would have thought that things would have been otherwise.
During the last election in Scotland, we promised a new and hard road. We needed to do that. When we looked at Scottish businesses and Scottish industry we saw a sorry story of decline from a position in which we had once led the country to a position in which we were almost propped-up also-rans. The Conservative Party in Scotland did not accept that that was inevitable, although many Opposition Members did, and still do.
We saw the exceptions in the oil-related industries, in the new technological industries, and even in the manufacturers of Scotland's national drink. We saw that they could succeed and modernise. We realised that the possibility of setting Scotland's economy right lay with them, if only we could get the attitude of mind right as well. That is where Scotland's weakness has lain for so long. The attitude

of mind is not right. For too long people's minds have been pervaded by a negative attitude that has led people to expect an eleventh hour rescue and do put off the evil day. That attitude was fostered hard by the previous Labour Government during their five years of office.
We set out to change that negative attitude to one of creation, innovation and expanding initiative. Such attitudes of mind have been deeply ingrained over the years and it will take time to change them. Change is never pleasant and never easy. It is all too simple for hon. Members—I am sad that the right hon. Member for Western Isles (Mr. Stewart) is not in his place, as he mentioned this point—to say that there is one simple answer, namely, investment. It is argued that Scotland's problems boil down to lack of investment and that more money will create an economic miracle in Scotland. It is not as if Scotland has lacked investment. Vast amounts of public and private money have been pumped into Scotland over the years, but much of it has vanished without trace or result like water in sand holes. Money was put into unsuitable places and structures.
Ultimately, investment will be successful only if the structure is right, and if it sets out to promote the viable and encourage the innovative. Too often, Scotland has failed to achieve that. We have been bewitched by our inheritance of older industries that have no future, and that have stood in the way of new development. At the last election we promised to change that. That is something that cannot be done overnight, however much Labour Members may demand to know when it is coming. However, the people in Scotland realise that this holds out the best hopes in the long run for economic prosperity and security for the Scots. That is what the Government are doing now, and in doing so they are keeping faith with those who elected them.
This is a painful process, especially in Scotland, where the Government face problems that are that bit larger, that bit more deeply rooted and that bit more endemic than they are south of the border. Because of that, it is just that bit more vital that we get the solutions right.
The Opposition base their attack on unemployment trends. They do not have


a monopoly of concern on this front. I, too, hate unemployment, especially among the young. I can accept unemployment only as long as it is short-term, and as long as it contains within itself the seeds of its own cure.
I would like to see special measures to alleviate school-leaver unemployment. I was encouraged by the Prime Minister's remarks earlier today that the Government are seeking ways to do this. I hope that she will consider some of the suggestions made by my hon. Friend the Member for Bridlington (Mr. Townend), because I believe that school leavers must be given a real chance and real job experience. They deserve our protection.
I do not question the sincerity of Labour Members, but I sometimes wonder about the total purity of their motives in pressing this issue so hard at this time. I cannot avoid a suspicion—and a certain distaste—about the obvious relief with which the Opposition seize on this issue in order to distract attention from some of their own internal wranglings.

Mr. Austin Mitchell: rose—

Mr. Ancram: I intend to follow the example of other hon. Members. In order to save time, I shall not give way. Watching the Labour Party is almost like watching an unhappy couple picking a fight with their neighbours in order to save their own marriage.
Opposition Members talk about the question of mobility as if it were something terrible, or something new. When the oil boom came to Scotland at the beginning of the 1970s we saw mobility. We saw people moving up to the North-East from the West of Scotland to take part in the jobs that were being provided. At that time we heard no objections from Labour Members, complaining about mobility and people moving to where the work was. I doubt whether hon. Members who travel round the North-East of Scotland will find many of those who work in the oil-related industries complaining about the fact that they had to follow the oil in order to find a good job.
Labour Members, talk about unemployment as if it had never happened under them. We do not need reminding that in Scotland, under their Administration

unemployment more than doubled. That was just the half of it. In the runup to the election they bragged constantly about the fact that unemployment would have been so much higher had they not created artificial jobs in order to bring the numbers down. They bragged about this so-called achievement—that they had kept unemployment down by creating these jobs. That was a deceit. There is no greater deceit on the young than to give them artificial jobs with no future. We owe the young—and all the people of this country—jobs with a future and security. I hope that the Government will not fall into the same trap as their predecessors.
Still the Opposition have no alternative. They have provided no long-term answers. The solutions put forward today by the Leader of the Opposition were painkillers to disguise the truth temporarily and allow the illness to worsen, undetected by the sufferer. They ask this country to have confidence in them and this sort of solution. If it were not serious, it would be funny. Part of the present pain that we in Scotland suffer is from withdrawing from those pain-killing subsidies and from the artificial job creation to which we had become accustomed in the past. We must now face reality. We are beginning to see signs of hope in Scotland. The Prime Minister gave some examples today.

Mr. James Hamilton (): Mr. James Hamilton (Bothwell) rose—

Mr. Ancram: I will not give way, but I hope that the hon. Member will come to Edinburgh and visit Ferranti, which is taking on an extra 500 people this summer. He cannot claim that that is failure. We see signs of hope among small industries in Scotland, which are determined to see the storm through and survive. If the Government were to falter now it would be a tragedy.
However, confidence is a two-way road. I ask the Government to show confidence in Scotland, too. We have our special problems. We are a long way from the South and from the centres of communication. It is always easier and cheaper to set up new industry and to provide new jobs near the centre. At a time of rationalisation there is a centrifugal force that too often militates against the peripheral plants, however successful


they are, and too often Scotland suffers unjustly.
The Government, with the assistance of the Secretary of State for Industry, avoided this with Ferranti last month, and we are grateful. We need understanding of this sort in order to promote the viable and the innovative. We are also grateful today for the announcement about an enterprise zone being created on Clydebank, however much the hon. Member for Tottenham may mock. If he came to Clydebank—I was there last month—he would not find people against the idea of an enterprise zone. People see this as something that holds out hope. His mockery today will sound very hollow in the ears of people in Scotland.
We have other problems as well. Too often we have been left with the wrong ends of the nationalised industries and we have had to pay the price for always having the poorer end. But there are better opportunities opening in Scotland now, and we urge the Government to consider them sympathetically.

Mr. George Foulkes (): What are they?

Mr. Ancram: If the hon. Member will show a little patience he may discover what I am talking about. I ask the Government to look sympathetically at some of the openings that have been made, in aerospace, for example. I urge the Government to back Jetstream, because it could give back to Scotland a deserved place in the aerospace industry. That is the sort of confidence that we need.

Mr. Foulkes: Mr. Foulkes rose—

Mr. Ancram: I have already said that I am not giving way. We are not asking for handouts. All we want is that degree of assistance and understanding which can take account of our special difficulties and permit us to compete on an equal footing.
If the Government can give us equal opportunity, allowing Scottish industry to show its paces, I do not believe that they will regret it. Scotland no longer needs painkillers. It seeks a real cure, which can produce real jobs and real hope. On what I have heard tonight I believe that there is no alternative to the Government's painful medicine. Certainly none has

been forthcoming from the Opposition Benches.
If we can finally reverse the trend of these past few years, if these policies can set the Scottish economy on a footing that can utilise the vast resources of skilled labour and initiative that we possess, instead of just carrying them, as so often happened in the past, we can see an end to our handout days and a breaking away from the branch economy tradition. We shall become industrial again in our own right. That is our goal in Scotland and we have confidence in the Government to help us achieve it.

Mr. Ernest Armstrong (): The longer that I am in public life the more I recognise that judgment and attitude are governed by one's own experience. This debate has been much too concerned with economic theories instead of with people and families.
I was born in Durham, and grew up in the 1920s and 1930s. The very mention of unemployment arouses in me feelings of bitterness, anxiety and growing fear. In the 10 years between 1928 and 1938 never fewer than 30 per cent. of the men in the county of Durham were unemployed. The constituency of Durham, North-West includes what we called the Bishop Auckland employment exchange area. In 1936, when most of the country was recovering from the economic blizzard, 52 per cent. of the men in that area were unemployed. There were more people out of work than in work, with all the attendant human misery.
I have bitter memories of hard-working men, who had spent almost their whole lives in the coal pits—decent men, anxious to support their families—whose dignity was taken from them. They were humiliated every week at the dole office. The Tory Party became known in my area as the party that created unemployment. For the first time since 1944 that has again become the talk in the Northern region. Even at the last election, far more people in the region voted Labour than for any other party.
We are aware of the inhumanity in the speeches from Conservative Members today. People such as the hon. Member for Croydon, South (Sir W. Clark) and the right hon. Member for Down, South


(Mr. Powell) talk about economic reality, cash limits and living within one's income. My people have been doing that all their lives. They know all about economic reality and living within the family budget.
I commend to the Secretary of State for Industry a remarkable document, which is in the Library. It is called "Men Without Work". It was published by the Pilgrim Trust in 1938. It is a study commissioned by the Archbishop of York on the results of long-term unemployment. It dealt not with statistics, figures and economic theories but with families living in homes. I was born in Crook, which is now part of my constituency, and that is one area covered in the document. One man interviewed, with a wife and six children had for the previous seven years lived on 36 shillings a week. He said that the worst thing was that they had grown used to it. At that time, if a schoolboy found a job handing out newspapers for half a crown a week, that sum was deducted from his father's income. Families were destroyed. There was plenty of mobility. Youngsters had to move from their homes to protect the pittance that was paid in unemployment benefit.
Even if the Government's policies work—I doubt whether they will—the price to be paid by the most vulnerable is too high. Conservative Members say that the price will be painful, but for whom will it be painful? The weakest in society will suffer, and they are the least able to resist the pain. I ask the same question as my hon. Friend the Leader of the Opposion—how long is the short term? Unemployment, short-time working and low wages have been the rule in Durham all my life, although the position is worse today.
In 1944 a very remarkable White Paper set the pattern and committed Governments to be responsible for creating full employment. I have too much experience to believe that there are easy answers, but since that time every Government have at least paid lip service, with varying enthusiasm and success, to regional policy. No Minister can stand at the Dispatch Box and say that his Government have solved the problem. As I know only too well, it is a running battle. In the county of Durham we have lost 100,000 jobs in

coal mining since the war. The Secretary of State for Industry the other day said that the Government could not solve the problems in the North and that regional policy is almost irrelevant. In Durham week after week, month after month and year after year we have used our regional allocations to run hard in order merely to stand still. Before 1945, had any politician said that Durham would lose 100,000 mining jobs, we should have declared it to be a wasteland. The Tory Government in the 1930s said that Durham would return to agriculture.
Other jobs have been created. The county of Durham is a more attractive place to live now than it was when I was a boy. One reason is regional policy. When the Secretary of State says that he wants to concentrate aid where it is most needed, he gets a hollow response in Durham. We know that he has no faith in regional aid and has cut it. That worries me. He has turned his back on a policy that has been accepted over the years.
When I was privileged to be in the Department of the Environment I went to Teesside to choose a site for the Property Services Agency, which was to provide 3,000 jobs, of which 2,600 were for the people on Teesside and other people were to be moved there. The jobs were for youngsters with O and A-levels. This Government have cancelled that project. The corporation cleared the site that we chose and it remains vacant. The jobs are to remain in the South.
Youngsters in the North-East with O-levels are competing for jobs as petrol pump attendants, which are far below their skills and which, even if they get them, they will find frustrating. Other young folk will be denied jobs. The Government are bringing about a situation that frightens me.
Conservative Members talk about realism and say that trade unions are adopting a new attitude. That is true, but the reason is fear. People dread the return of the days which we believed had disappeared for ever and which we are not prepared to accept again. No society can be built on fear. It is easy for those born into a comfortable society, who have never known anything else, to lecture others about the need for change.
I wish that the Prime Minister and others would stop lecturing the folk of Durham, some of whom have been made redundant from the pits four or five times and have taken jobs in the textile industry and been made redundant there as well. How are they expected to react when they hear Ministers say that they are pricing themselves out of work? The Prime Minister suggested that the unemployed were somehow inadequate and that their unemployment was no one else's fault.
My area does not want charity. The biggest waste, in my view, is the outpouring of public money to skilled workers and others who want to work, but for whom there are no jobs. We need a new attitude to public expenditure. Conservatives seem to regard almost all public expenditure as evil. In fact, paying craftsmen for doing a job and attracting apprentices into good jobs, are good examples of how public money can be well spent as a preparation for the future of our country and an investment in permanent assets.
I grew up in a community that used to be lectured in the way that the Prime Minister is lecturing us now. We were told that the only thing that we understood was 11 men for 10 jobs. A former Tory Cabinet Minister said "Treat them mean and make them keen." That is not the basis for a good society. If we want to provide meaningful jobs, we need the co-operation of everybody and we need social justice in all our fiscal and economic policies.
I warn the Government that I speak for an area where fear is again becoming dominant in decent families, who wonder how their children and grandchildren will be able to contribute to society and so fulfil themselves as human beings. We can talk about inflation and the public sector borrowing requirement, but unemployment is the most inhuman condition that I know. It creates a vulgar and ugly society. The Government have demonstrated again today how complacent they are in the face of that terrible human problem which we must combat.

Mr. John Ward (): The right hon. Member for Durham, North-West (Mr. Armstrong would not expect me to agree with everything he said, but I was

impressed by his remarks and by the feeling with which he expressed them.
In contrast, although I listened carefully to the Leader of the Opposition, not one word of acceptance of the previous Government's mishandling of the economy did I hear. As usual, his speech was long on calls for action and short on realism and new ideas. Having been dragged from the brink of bankruptcy by the IMF in 1976, the Labour Government could not resist trying to buy their way back to power. No blank cheque was left unsigned. It was "Pay tomorrow or pay the day after, providing you vote for us".
While the docks at Liverpool and London priced themselves out of existence, money was found to keep the fairy tale going just that bit longer. While steel workers and car workers were calling for bigger slices of a non-existent cake, the Labour Government managed to keep reality at bay for a little longer. Alas for their calculations, they all went up in smoke in May last year.
The world and the nation realise that we have to earn our way and we accept, at least on the Government side, that the rest of the world does not owe us a living, but the Labour Party lives in its own self-created Socialist version of cloud-cuckoo-land.
As a worker in the construction industry, I suppose I could have looked forward to a rosy future, building warehouses to fill with goods made under Labour policies at a price at which no one would ever buy them. The Labour Government encouraged us to live in a subsidised, live-on-tick world. That should surely have been exposed by now to the whole nation.

Mr. Heffer: There will not be a construction industry by the time this Government have finished.

Mr. Ward: The hon. Member for Liverpool, Walton (Mr. Heffer), who has just intervened in his usual charming way, claims to know a lot about the construction industry. While he has been sitting here for 16 years talking about it, I have been working in it. For the hon. Gentleman's special benefit, I shall digress from my speech to say that the industry has changed a lot since the days when he was directly involved.
My right hon. Friend the Prime Minister has set us on the only path which can restore reality to commerce and industry. Those who negotiate pay rises in the private sector understand that reality better than does the Labour Party.
All my working life has been spent in the construction industry. For the past five years, I have been helping to run an export company.

Mr. Heffer: The hon. Gentleman does not speak for the industry.

Mr. Ward: I shall ignore the monologue of the hon. Member for Walton. We have heard it so often that we all know the score.

Mr. Heffer: Will the hon. Gentleman give way?

Mr. Ward: No.

Mr. Heffer: The hon. Gentleman is not speaking for the construction industry. He is not even speaking for the employers.

Mr. Ward: As an export company, we scoured the world for work and had teams working with local people all over the world. The steady decline in the competitive edge in British industry over the past five years was plain to our overseas customers, even if workers and employers in the United Kingdom could not see it.
How does one explain to the owner of a textile mill in Bolivia or the Sudan that one cannot complete on time because of a dock dispute or a steel strike in Britain? What are one's chances of a repeat order from a West African jute mill when one has had to persuade the client to permit the order for steel work to be switched from the United Kingdom to Singapore because there is an industrial dispute in the steel industry in the United Kingdom?

Mr. Martin Flannery (): There has been only one steel strike in 100 years.

Mr. Ward: I have outlined the realities of our situation. Those are the realities of exporting. If we do not meet customers' needs, our foreign competitors will, and they will do so at competitive prices. If the workers of the BSC have not yet got that message, they need only visit my constituency. One firm there

was a large customer of the BSC and was proud that it bought only British steel for its products. It will now buy at least 50 per cent. of steel supplies overseas, because it regards that as its only insurance against another steel strike.
While we sit here talking, other industries and commercial firms are working themselves into the same situation. I have to refer only to the Mafia that exists in Fleet Street to show how people can put themselves out of work.
Industry is often attracted to my constituency by the co-operation that exists between worker and employer, and it understands the need to modernise and compete in the world market. I give only three illustrations, though there are many more.
In the past few weeks, Christopher Hill, which has been established in Poole for 134 years, has opened the most modern animal feed mill in Europe. It puts the company in a position to compete with the world. Ryvita, which is famous for its crispbreads, has seen inroads made in its market by the Continental toasts that are apparently sweeping the board in the United Kingdom and abroad. The company has not sat back and moaned but has installed its own machinery and done its own design and we shall shortly see on the market a product that will compete at home and abroad wiht all the Continental products. It is no wonder that Ryvita has just received the Queen's Award to industry for exports.
Another recipient of the Queen's Award in my constituency is Loewy Robertson, which won its award for exports of heavy plant. Its director and general manager, Mr. Peter Newman, said when he received the award from the Lord Lieutenant:
The motivation is one of survival.
We have lost our home market and thus must play internationally amongst the big boys.
There are not many heavy plant builders in the world and we know them all, from Japan though Europe to the U.S.A.
They are all dedicated to our downfall.
We play in a league where relegation means oblivion.
We have men who design the fastest rolling mills in the world and then a lot more who stay with the situation to make certain they roll that fast; we have people who can empathise and chat up Slavs, Latins, Mid-Westerners and Geordies, sometimes all at once, and above all, we have a large group of people who pick up the bits.


I do not subscribe to the idea that our German or Japanese competitors work harder than we do.
We have all seen them and they don't.
It is, however, a mathematical truism that if in a given group of 10 people 2 are pulling in the opposite direction the group effectiveness is reduced by 40 per cent., which co-incidentally is not far from the competitive advantage enjoyed by the Germans.
In conclusion he said:
We can observe a cyclic re-emergence from the dominance of European engineering, particularly in the United States of America and we in Britain are well-placed to take advantage of it.
That quotation sums up what we are all about.
I hope that I have shown that in my part of the world there is the realism, skill and grit to see us through the present difficult period. The message sent by most of my constituents to the Prime Minister is: "Do not waver and do not change course." My constituents know that there is no other way to set our country on the road to freedom and prosperity again.
I am encouraged by the determination of my right hon. Friend to reduce expenditure in the public sector. Nothing demoralises the wealth creators of our nation more than to see a large proportion of their hard-earned profits going to support bureaucracy. It is right that the taxpayer should decide how much the services of those we employ are worth.
Those people whom we cannot, or do not wish to, afford must accept that there are limits on their wages just as profit levels limit wage increases in the private sector. While my right hon. Friend is looking for savings, may I commend a neck wringing session for those quangos which still spend much and earn nothing?
I turn briefly to the proposals of the Opposition, or at least of those members of the Opposition who were in agreement long enough to have produced the recently published draft manifesto of the Labour Party. Irrelevant, obscene, call it what we will, at a time when we need to instil confidence in industry, the Labour Party shows a determination to repeat its failures of recent years. Those great cure-alls, nationalisation, State control and regimentation, are mentioned in the document. Everything is there except the mention of an iron curtain to stop us all escaping.
The message of this book is: "Fail, and we finance you. Succeed, and we take you over". It postulates a "Head's I win, tails you lose society". Facetiously, perhaps, I may say that if big brother from Liverpool does not get us, little brother from Bristol will.
This booklet ignores the character of the British people the majority of whom will tell my right hon. Friend to carry on with the task that she has begun. We can show our contempt for the Opposition's censure motion in the lobby tonight, and in showing that contempt we shall be reflecting the opinion of the country.

Mr. David Stoddart (): The most frightening thing about the Prime Minister's speech today was its stubborn, brazen inflexibility. It seems that no matter what happens the Prime Minister will not change her policies. That sort of inflexibility will eventually bring her down.
The Conservatives, and the Prime Minister, are obsessed with tax cuts and cuts in public expenditure. They say that those things will put the economy right. In June 1979 the Budget gave huge tax cuts to the already well-off. Tens of thousands of pounds were given to individuals and the total cuts amounted to hundreds of millions of pounds. We were told that that was the way to get more investment into industry. But what has happened to investment since then? Investment has tumbled. Therefore, the tax cuts policy does not work.
The Government say that workers are pricing themselves out of jobs. But who believed in free collective bargaining? Who incited the trade unions and the workers to free collective bargaining in the winter of 1979? And who are they now to talk about workers pricing themselves out of jobs. It is not true that high wages price workers out of jobs.
Two hundred of the lowest paid workers in my constituency, working for Compton Sons and Webb in slum factory conditions, were made redundant. They were among the lowest paid workers in Swindon and they did not price themselves out of their jobs. They were thrown out of their jobs by their employers. So, let us hear no more of workers pricing themselves out of jobs.
The Prime Minister spoke of modernisation and how the co-operation of the people was needed in modernisation programmes. How on earth does she think that she will get the co-operation of people who see the dole queue as the end product of their co-operation? There are now 1·9 million people unemployed and those who co-operate in so-called modernisation may well find that they will join the 1·9 million unemployed.
Government policies are full of absurdities. They talk of squeezing inflation out of the economy, but that proposition does not hold water. This Government squeezed inflation into the economy in the first place and they are now blaming everyone else because their policies are not succeeding. The Government squeezed inflation into the economy in the form of increases in VAT, rents, rates, and gas and electricity prices. If the Government wish to do something about inflation, why do they not cancel the surcharge on gas prices? That is something positive that they could do. Why do they not say to the Post Office board that they will increase cash limits so that prices will not have to increase by 20 per cent. in the autumn?
The Government are extending their free market dogma into the employment market. They are deliberately allowing mass unemployment in order to undermine the trade union movement and to browbeat working people into a docile acceptance of lower living standards. This is at a time when revenue from North Sea oil is gushing into the coffers of the Treasury.
The Government's neglectful regional policy has brought disaster to many parts of Britain including Merseyside, the North-East, Scotland and Wales. Those areas are tasting again the grinding depression of the 1930s. But, the blight is spreading. It is not confined to Merseyside, the North-East, Scotland and Wales. The blight is spreading to the South. The highest recorded increase in unemployment last month was in the South-East.
My constituency of Swindon is in the throes of a slump as severe as that of the 1930s. The number of unemployed is the highest for 40 years and the figure jumped, in a single month, by 18 percentage

points. But for the sound, Socialist and forward looking planning of the local authority there since the 1960s the position would be infinitely worse.
As well as unemployment, short-time working is increasing sharply. Many British Leyland workers in my constituency return from holiday this week to find themselves put straight on to short-time working. At the same time, Wiltshire county council has decided to go completely barmy by announcing its intention to site an open refuse tip 100 yards from the site on which Scherers, an American pharmaceutical firm, was about to build a new drug-encapsulating factory which would employ between 200 and 300 people. As a result the jobs will be lost, not only to Swindon but to the rest of the country, because the firm will establish itself in Europe.
In the context of Swindon's problems, the Prime Minister's suggestion that people should move to areas where jobs are available is cruel and insensitive. My right hon. Friend the Leader of the Opposition mentioned workers from Glamorgan moving to Gwent. I assure him that if they go across the Severn bridge by car, or take a high-speed train to Swindon, they will find only 622 jobs with 6,500 people looking for them. They will find not 10 jobs for 11 men but one job for each 11 men.
It is no use the Prime Minister talking about mobility of labour, because there are no jobs in places such as Swindon. In Reading the housing list contains 4,000 names. Where on earth will the people live, even if they find jobs? The Housing Bill will take away from local authorities their flexibility, because it forces them to sell their council houses. Workers have no chance of being mobile, even if they find jobs because houses are not available. In the South-East the hospitals, roads and schools are not available to accommodate an influx of population.
Unemployment will cause social, industrial and political unrest. The Government ignore the social problem at their peril. There are actions that the Government can and should take. They cannot pass the responsibility to the workers nor the Opposition. It is the Government's duty to cure unemployment. It is about time that they did it.

Rev. Ian Paisley (): The Prime Minister called upon hon. Members to be realistic and optimistic. I fail to understand how anybody from Northern Ireland can be optimistic when the unemployment statistics are so frightening and terrifying. It has been said that the speech by the right hon. Member for Down, South (Mr. Powell) was cold logic. It was certainly cold comfort to the unemployed people in his constituency.
Let us examine what is happening in Northern Ireland. Last week it was announced that 84,684 people were unemployed. That is the worst unemployment figure for 40 years. It takes the Province back to the terrible days of the hungry 1930s.
A total of 11,656 workers joined the dole queue in the last month. Of those, 5,396 were school leavers. In Strabane the unemployment level is 27·5 per cent. In Newry, which is part of the constituency represented by the right hon. Member for Down, South, the unemployment level is 25·6 per cent. A total of 4,224 workers in the town have signed on, with a further 566 school leavers. There are parts of the Province that once were bright in employment but are no longer. Ballymena, for example, once had the best employment rate in the country. Now it has a 15·1 per cent. unemployment rate.
The figures are grim, but they become more grim when one looks to the coming months. The agriculture industry, including the Ulster Farmers Union, forecasts that unless something is done in the pig and poultry industries and in intensive farming, another 5,000 jobs will be lost. It has been announced by Cambridge university economists that Ulster can look forward to 107,000 unemployed by 1983. What do the Government tell us about the matter? The Minister of State, Northern Ireland Office, speaking in the Province said "These figures are bad. They are grim, but there is a silver lining."
We see no silver lining in the Province at present. The House would do well to understand that the right hon. Member for Down, South does not speak for the vast majority in Northern Ireland. Neither does he speak for employers in Northern Ireland—who have lobbied all Northern Ireland Members—nor for employees,

who see a dark shadow over their jobs. The lengthening list of people on the dole shows, clearly and plainly, that we are in a tragic and terrible situation. The firms closing in Northern Ireland are not closing because they have no order book. They are closing because of difficulty with cash flow. Would it not be better, instead of putting those people on the dole, to pay the redundancy and dole benefit to those firms to keep people in employment? Why cannot the Government take that sort of step to ease the unemployment in the Province?
We have heard a call today for equal opportunity. Hon. Members should examine the situation in Northern Ireland. First, we have the terrorist problem—the bombings and the killings, and the blowing-up of factories. People with money to invest in Northern Ireland will look twice before they invest, due to the terrorist situation. The second problem is that Northern Ireland—

Mr. J. D. Concannon (): The hon. Gentleman suggested that one way to help relieve unemployment was to use the money that would be paid in social benefit to keep factories open. Is that not what the last Government were doing?

Rev. Ian Paisley: I supported in the House what the Labour Government did in regard to this matter. I voted consistently against cuts for Northern Ireland. A small firm in my constituency with a cash flow problem but an order book that was full would still be employing 60 people if it had received assistance. Now those people are unemployed. That situation is repeated over and over again across the country.
We do not have any raw materials. These have to be imported across the Channel, and finished goods exported. How can there be equal opportunities when other firms have access to raw materials? There is also the difficulty of transport costs and the fact that the people of Northern Ireland pay two-and-a-half times more for gas and electricity than the rest of the United Kingdom. We are simply asking for equal opportunities. I do not understand how Northern Ireland firms have been able to compete when they face all these difficulties. Those still in business should be congratulated.
I must say to the Government that I would be failing in my duty as a representative of Northern Ireland if I, along with my hon. Friends, did not vote against the Government on this issue.

Miss Betty Boothroyd (): I shall not venture into matters concerning Northern Ireland, for which the hon. Member for Antrim, North (Rev. Ian Paisley) will perhaps forgive me. Instead, I wish to bring the debate much closer to my home ground in the West Midlands and refer to the comments of the hon. Member for Croydon, Northwest (Mr. Taylor), who spoke in optimistic terms about the future of the West Midlands. I wish that I could share his optimism. He seems to know a good deal about manufacturing industry there, but he obviously does not speak to the same manufacturers as I do. Earlier this year, when industrial decline and unemployment were biting deep into the region, I made representations to the Secretary of State for Industry and asked him to state his plans for revitalising the area and improving job prospects. In response I was told that the Government were reducing public expenditure and taxation and intervention in industry so that an economic climate would develop in which enterprise and skills were rewarded and in which industry was encouraged to expand and new firms to start up.
This debate is taking place because the economic climate which the Government have created has encouraged contraction, not expansion. Their policies have brought plant closures instead of innovation. Instead of reward for skills, those skills rust as people are laid off. The figure has averaged 2,000 a month in the past 12 months in the West Midlands alone. Last month the figure was 5,000. No wonder the hon. Member for Croydon, North-West and I do not speak to the same manufacturers.
Much has been said about the effects of an over-valued pound, of roaring inflation and of high interest rates. Any of these factors occurring singly are harmful enough, but their combined effects have dug a grave into which large chunks of viable manufacturing industry are now falling. The consequences for employment and investment, which lie at the heart of our trading prospects

throughout the 1980s and beyond, are abysmal.
For the sake of brevity, I shall cover only two points of concern. The evidence from my area is that the high value of the pound has reduced order books and priced manufacturers out of export markets. But it has had another effect as well. It has made way for imported goods to take a progressively larger share of the home market. All hon. Members know that hardly a week passes without one industrial federation or another sending us, across the party lines, information illustrating the effects of this penetration on their industries.
I was surprised to hear the Prime Minister tell us at Question Time today that one of our largest exports was motor components. Coming as I do from an area which manufactures motor components, I doubt that. I wish that it were true. Eastern Europe now accounts for 40 per cent. of automobile lamps coming into this country. Italy has moved up market. Eastern Europe's refrigeration products have increased by well over 150 per cent. in the past 12 months.
Eastern Europe now controls 55 per cent. of the British market. Instrument engineering takes 58 per cent. The list is endless.
Of course we live by trade, but trading relations are based on the assumption that like competes with like. As the Prime Minister acknowledged today, trade operates both ways. The Government know that we cannot survive without exporting. They must understand also that neither can we survive in a world where other Administrations are subsidising their manufactures whilst this Government continue to believe that they have no obligation to industry or to those who work in it.
Could it be that a large volume of unemployment will produce the regulatory mechanism for import restraints? That is, perhaps, what it amounts to. However, that is not the answer. What is needed is rapid and effective action to deal with the unfair trading practices which have become obvious to many hon. Members over the past 12 months or so. Moreover, selective import restrictions have become necessary in sectors where there is now no genuine international competition. The stage has long passed
when we could rely on the voluntary exercise of prudence by our trading partners. It has not worked. Trading partners are there to talk to, negotiate and reach agreement with, and the Government must deal with that. No one else can. Industry now requires a breathing space, not in which to sit back, relax and take things easy but to use beneficially, to ensure that it moves a step ahead in new technology, in processes and products, and to ensure that the skills of our people are developed to match that forward move.
In spite of the fact that this is a motion of no confidence—and I should be perfectly entitled to do no more than expose the Government's inability to govern—I want to be constructive. Here I come to my second main point. I illustrate it by referring to the Wilson report and the note of dissent which sets out a framework for a new investment facility which is needed to secure our future as an industrial nation.
A few weeks ago, when this House debated a matter of a similar nature to that being debated this evening, many of my Opposition colleagues called for greater financial investment. There was a chorus from Government supporters saying "Where is the wealth coming from?" In part, I believe that the answer lies in indicating the massive growth which has taken place in life assurance companies and pension funds which now, between them, command an annual inflow of about £9 billion. The increasing concentration of savings in these institutions has profound implications. In a few years they will own two-thirds of all equities listed on the Stock Exchange. What do they do then? Will they do what they did 10 or 15 years ago with land and property speculation, or do they buy gold bars and diamonds to put in a safe until their value has increased? That is not the road to wealth creation.
The party now in Government is fond of reminding us of the need for wealth creation. The Tories must know that a proportion of this facility, with a properly guaranteed rate of return, would provide a very attractive form of investment for the institutions and at the same time actively promote the restructuring that this country needs.
For their part, too, the institutions must acknowledge that their ability to meet the expectations of those whose interests they safeguard crucially depends on the real rate of national economic growth. They cannot be left out of a programme for the industrialisation of this country. Their own self-interest is clearly involved and they cannot stand apart from that growth.
As to the public sector, if the revenue that has so far been collected from North Sea oil is sizeable, the future revenue will be vast. In directing it towards the public sector borrowing requirement, or using it to grant a taxation bonanza, I tell the Government that they are not making the most beneficial use of Britain's wealth. Those revenues must be harnessed, together with private sector funding to provide the research and development to strengthen Britain's competitiveness for the years when North Sea oil revenues will diminish. It is the job of the Government to provide the mechanism for this type of investment, because no one else can do so. Industry cannot do it. Industry has never done it in my lifetime. Never has there been greater need for change for Government leadership and for involvement. The Government's policies over the past months have so weakened our position that even if industry had the capacity for reinvigoration that capacity has been greatly diminished.
The voices raised for positive action come not only from Labour Members. There are Conservative Members who take the same position. Today they waved their Order Papers in support of the Prime Minister when she announced that there would be no U-turn. However, many of those hon. Members in the corridors, in the tea rooms and in the Library express great anxiety about their Government's disastrous policies.
There are voices outside the House that we should heed. Only last month the director-general of the National Economic Development Office told the Industrial Participation Association that more successful economies than ours spend substantial sums to help industrial adjustment. He said:
In France and Germany, to take only two examples, government plays a direct role in sustaining research and development, in enforcing a high level of training and in backing judgments about what technologies are likely


to be an essential part of future economic success.
Yet we have a Government who continue to ignore their essential role of helping industry to improve its performance at a time when competitors, whatever their doctrine, be it Right or Left, are accepting increased responsibility for assisting their industries.
I confess to no education in financial management or in economics, and there have been times when I thought that a very inhibiting factor. Now I must tell the House that I feel no inhibitons for my shortcomings as I witness the destruction caused to this country and the despair brought upon its people by those who profess financial and economic expertise.
When the Prime Minister assumed office she spoke of despair. Despair was mentioned much earlier in the debate. In despair, the right hon. Lady used the words of St. Francis. She said:
where there is despair, may we bring hope.
Today those words need transposing.
Where there was hope, it is she who has brought despair—the despair that is shown by the elderly and the infirm when adverse social policies reduce their meagre quality of life; that the despair is exhibited by families seeking a home and plagued with inflation that ravages their pockets; the despair that is shown by the young who see their future in the dole queues, and despair that is paramount among the unemployed in the losing battle for jobs.
Hope is born of political decisions that a Government must make in the interests of the entire nation. The Government lack wholesomeness in their decision-making, and the sooner we get rid of them the better for everybody.

Mr. Speaker: I remind the hon Member for Gosport (Mr. Viggers) that it is hoped that Front Bench speeches will begin at nine o'clock.

Mr. Peter Viggers (): I am grateful, Mr. Speaker. I am sure that there will be no dearth of hon. Members to remind me of your words should the time approach nine o'clock.
I shall not follow the effective speech of the hon. Member for West Bromwich, West (Miss Boothroyd) for two reasons.

First, this is a broad debate because it will lead to a vote of no confidence in Her Majesty's Government. Secondly, we should range beyond the narrow subject of employment.
We are discussing a hybrid motion. It is an attack based on unemployment but dressed up as a censure motion. I suspect that this hesitant approach, which is based on the one thing that will find agreement with the Government, marks the fact that the Opposition lack confidence in themselves.
Because it is a confidence motion it is entirely proper to consider the whole range of Government activity to decide whether the Government are fit to govern. For me, the Government have two qualities that sing out and give me pride in playing a small and humble part in supporting their activities. The first quality is honesty and the second is responsibility. One might think that those are not new virtues to bring to government—but they are, and they are like a fresh breeze. For too long Governments in Britain and throughout the world have lived in an "expectation society". That phrase was first used in my hearing by the United States ambassador, Mr. Kingman Brewster, who talked about an expectation society in a memorable speech a couple of years ago.
This morning I put myself to the test of reading again the Labour Party manifesto for the October 1974 election. It made sad reading. All that hope and expectation has come to so little. In all fairness, the Labour Party set out to pass laws that would implement the policies that it sought to achieve. But it is one thing to pass laws, and another to eradicate the problem that the party originally set out to eradicate. I shall give three brief examples of that. First, in the area of the Rent Acts, the previous Labour Government set out to eradicate the damage caused by the private landlord, but achieved the paradoxical result of making life more difficult for the private tenant.
Secondly, the employment protection legislation made it more difficult for smaller employers to employ people, and had the paradoxical effect of damaging employment. Thirdly, in the area of fuel pricing, the Labour Government tried to introduce a scheme to help people with


their electricity bills through the electricity discount scheme. Only 67 per cent. took up the scheme, and 10 per cent. of its cost was spent on administration. Because it was limited only to electricity customers the scheme missed much of its target.
In each case—and I could name hundreds more—the Labour Government set out to raise the level of public expectation of what they could do, and then failed to fulfil it. That has happened for years throughout the world. Governments offered higher pensions because people clamoured for them. They asked "Do you want increased benefits?" If that was the case they replied "Yes, you can have them". They offered new benefits to people who had not previously received any benefits. In every case expectation was encouraged by the Government. People now wonder why, when the Government have been so generous, everyone is not better off. Generous Governments are popular and mean Governments are not popular.
The Government have nothing that does not belong to the people. If the Government give away money, they must raise money to do so by increased taxation, the sale of assets or, more likely, by printing money—which is inflationary. The Government are paying up to 13 per cent. for their borrowing, which inevitably leads to more inflation and the risk of hyperinflation, as was pointed out by the right hon. Member for Down, South (Mr. Powell). I understand that he caused much annoyance among the Benches on which he sits because of the eloquent way in which he expressed his opinion.
The Labour Party treads the path of generosity while the Conservative Government tread the path of honesty and principle. That leads to policies which are not popular in the short term but which are in the best interests of Britain in the long term. For example, the Government have taken the unpopular measure—it is unpopular because it is expensive—of ordering Trident and Chevaline, of operating the Polaris missile, and of allowing cruise missiles into Britain. That is not a popular subject even in my constituency, which specialises in defence. Those subjects cannot be regarded as vote winners, yet the Government have taken the courageous view. A second area that is

unpopular in the short term is that of energy pricing. No policy has been less popular in the short term than the proper realistic pricing of gas and oil. Yet it is right that they should be realistically priced on a long-term basis.
I refer finally to import controls. It would be easy for the Government to yield to the short-term demands for some selective controls, as advocated by Labour Members, yet they have adopted the honest and responsible task of taking the long-term view.
I am proud to support the Government over this motion of confidence. After all, it is a wide-ranging motion, the debate on which has mainly been restricted to the narrow area of employment. I am confident that even on that narrow basis we have won the argument, and I am certain that we shall win the vote.

Mr. Speaker: Mr. Michael Foot.

Mr. Heffer: On a point of order, Mr. Speaker. Before my right hon. Friend the Member for Ebbw Vale (Mr. Foot) speaks, may I ask whether the Chancellor, in his speech, will reply to the debate that has taken place or whether he will make a straightforward economic speech?

Mr. Speaker: Order. The hon. Gentleman is an old hand in this place.

Mr. Michael Foot (): The hon. Member for Gosport (Mr. Viggers) referred to the evident political fact, which no one can deny, that politicians of all parties sometimes raise expectations which cannot be fulfilled. Some of the difficulties and cynicism that arise in politics happen when that occurs. However, the hon. Gentleman might also have referred to what was said by my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) about the expectations which were raised at the end of the war, when a Government policy was produced promising an attempt to secure full employment almost for the first time this century.
Although that was an expectation that was raised, the fact that it was enunciated, that it was backed in those circumstances and that it aroused such support, not only from the Labour Party but from other parties as well, meant that it played an important part in helping to shape the


politics of our country during the next 25 or 30 years. I shall refer in a moment to the way in which I believe that expectation has been misinterpreted. While I agree that we must be careful how such expectations are raised, it would be foolish on that account to argue that we should never raise expectations of that nature at all. Were we to embark upon that course, it would be disastrous for the whole country.
I want to direct my remarks first to the claim which was often made in the debate, and frequently elsewhere, that there are at present no alternatives to the policies that are being pursued by the Prime Minister and her Government. That is a cruel and arrogant claim for anyone to make. I wonder whether those who make it realise exactly how cruel and arrogant it may sound to those up and down the country who are being thrown out of their jobs, be they older men and women who are thrown on to the scrap heap or younger people who are thrown into the world and seemingly think that there is nothing but a scrap heap to be thrown on to. All of us should be careful about suggesting that such events are inevitable and that there is no alternative for such people who have been treated in that way.
That claim, when it is made by the Government, it patently false; and I give just a few examples. First, there are measures generally undertaken by the Manpower Services Commission to deal with the unemployed and the unemployment situation. At least two or three different policies can be followed in that respect. We built up the MSC as strongly as we could. We supported it on every occasion that we could, whenever it came to us with fresh proposals for assisting in training and other schemes. We did our best to respond to its demands, because we believed that the MSC and the people who ran it—from employers and trade unions, representing industry as a whole—made valuable proposals for the country as a whole. We met our responsibility, and we met its claims whenever possible. The programme for the expansion of training in this country throughout that period was extremely valuable. Compared with other recessions that we have lived through, there was an attempt, until recently, to ensure that

training services were expanded on the scale that the situation demanded.
One of the first acts of the Chancellor was to cut the amount of money that was provided for the Manpower Services Commission—a cut of about £170 million. I know that there was some expansion of some of the programmes, but mainly the Government cut them. They say that there is no alternative to their policies, but the first thing they could do, if they are really concerned about unemployment on this scale, is to restore all the cuts that they made in the programmes of the Manpower Services Commission. We are told that the Secretary of State for Employment is preparing, or thinking of preparing, or wondering whether he will be allowed to prepare, a number of measures to present to the House later in the year. He should be presenting those measures to the House before the Summer Recess. I dare say that the right hon. Gentleman fought in the Cabinet to prevent those cuts. Certainly during the past few weeks he has tried to indicate to the country that he is deeply concerned about the scale of unemployment, and he has spoken about how remedial measures might be taken at an early date.
I ask the Government to make an announcement on this subject—they have plenty of announcements to make about hacking industries this way and that, and giving industry back to private enterprise—before the Summer Recess. They should restore all the cuts and prepare an expanded programme for the Manpower Services Commission, which could help to alleviate this situation. Let no one say that there is no alternative, when there is one alternative that the Government could act upon immediately.
Let us consider what the Government could do for particular industries. We have had one announcement, which was certainly welcome, of the Government providing public funds to assist in the manitenance, encouragement and development of Inmos, as a result of public action and support. I am glad that that money has at last been extorted from the Government, but we expect them to act in many other fields.
The steel industry affects employment and the whole future of our country to a degree that we believe may be more


important than the Government seem to be aware. Why do they not come forward with proposals for assisting that industry—also before the end of the Summer Recess? If the Prime Minister had listened to our advice before Christmas she could have prevented the strike in the steel industry. She rejected the advice, offers and pleas from us and from inside the British Steel Corporation, and she was therefore responsible for helping to pour down the drain about £400 million of public money which was lost as a result of the steel strike. She could have stopped it if she had listened to our pleas. Now all the greater is the responsibility on her Government to come forward with proposals for saving that industry from destruction by giving it more money. That is necessary in order to save the industry.
The Secretary of State for Industry indicated recently that he was thinking of giving the industry more money. We say that money should be brought forward. We are not content that bulk steel making in this country should be destroyed. We understand that that may mean further investment, further funds, further support for the steel industry. Any Government who are genuinely concerned about unemployment should come forward with proposals of this nature. But some Conservative Members say that there is no alternative to the Government's policies.
What is to happen to British Shipbuilders? We understand that statements are to be made on the shipbuilding industry. I hope that they will be made before the recess. I hope, too, that the reports that the Prime Minister has been exerting her influence there to injure the most profitable part of that industry are not true.
Action could be taken immediately by the Government on individual industries. We say that action should be taken if the Government want to prove to the country that they are genuinely concerned about the scale of unemployment.
I come to the differences about how to deal with inflation. We do not need any lectures from the Prime Minister or her Government on this subject. We managed to bring down the rate of inflation. She has put it up. When she has

succeeded in bringing down inflation to the level at which it stood when she assumed office—I do not put it so strongly as that; when she can bring inflation down to the 15 per cent. that we had to take over in March 1974—she will be able to talk on that subject. So far she has not been very successful. All she has done, with the assistance of the Chancellor of the Exchequer, has been to double it. As we know, the Chancellor of the Exchequer is always right. He says "We are on course." The only trouble, or one of the troubles, with the Chancellor of the Exchequer is that, whenever he thinks of a number, he doubles it, and one of the figures that he has doubled is the inflation rate.
I come to the important arguments which took up a considerable part of the debate about Northern Ireland as it applies to the rest of the problems of the country. I am sure that all who were present during the arguments which took place would say that they were of major importance for the whole of the economy.
What is happening in Northern Ireland surely is not disputed. I do not know why Conservative Members should consider this a laughing matter. Some of them should grow up. I need hardly point out that a significant number of redundancies and closures are pending, and indeed, the companies affected read almost like a "Who's Who" of Northern Ireland industry, with redundancies already announced for Courtaulds, Grundig, Ford, Tilley Lamp, Bridgeport Brass, Olympia, Demag, and Duffs, and short-time working at Viking Bicycles and in dozens of factories in the textile industry. If it were not for Government action, those redundancies would also be affecting Harland and Wolff. That was one of the items which figured in the discussion with the right hon. Member for Down, South (Mr. Powell). The right hon. Gentleman, who threw his protective cloak over the Government—they certainly required it—is in favour of the most rigorous application of his monetarist theories but not in Northern Ireland. The rest can take the medicine but he wants the syrup.
When we asked about Harland and Wolff the right hon. Gentleman said that that was not the same thing. He said that that was not inflation. He said that


that was controlled expenditure. We would all like a little controlled expenditure of that nature. If there could be controlled expenditure on the scale of Harland and Wolff in all the other distressed areas, there would be a public sector borrowing requirement of almost Peter Walker proportions.
I often wonder where the chief devotion of the right hon. Member for Down, South would lie when the choice came. I sincerely believe that he is devoted to the interests of Northern Ireland, but he is also devoted to his own theories. The choice was revealed to the House today. The right hon. Gentleman supports his theories and that means that if he had his way, Northern Ireland would be crucified on the cross of monetarism. Those who have followed events in Northern Ireland know what would happen if the right hon. Gentleman's theories were rigorously applied there, just as he wishes them to be applied in the rest of the United Kingdom.
The Prime Minister thinks that the right hon. Gentleman's theories should be applied. She was cheering the right hon. Gentleman throughout his speech. She has never had such a strong supporter on this subject. I understand her desire to get supporters, particularly given her pre-ent company. I can see that she is eagerly looking for support. [AN HON. MEMBER "Cheap."] Nobody is going to say that they are dear.
The right hon. Lady approves of such theories. She claims to be curing inflation, although we have not seen any sign of that. Inflation used to be described as too much money chasing too few goods. If the Government rigorously apply their policies the right hon. Lady will probably succeed in bringing down the rate of inflation. There will be less and less money chasing fewer and fewer goods, particularly British goods. That is her cure for inflation.
The right hon. Lady and her friends have managed our economy so skilfully that we have a combination of high interest rates, high parity rates and ferocious cuts in public expenditure. That combination will have an extraordinary result. It will transform North Sea oil from a national blessing into a national curse. That is what will happen if the right hon. Lady's policies are pursued to the better end.
Today, the right hon. Lady has made it all the more difficult to retreat from those policies to policies of sanity. I have often acknowledged that the right hon. Lady has many qualities. She has a clear, tenacious and courageous mind. The trouble is that she often allows her mind to have only one idea at a time. When that happens, it rattles. The fiercer the rattle, the more menacing the moment. I see that I have support for that proposition from members of the Cabinet. With the utmost vigour, the right hon. Lady seized on the policy that the right hon. Member for Down, South has preached for so long.
But what does she really think? How does she suppose that all the economic wisdom of the ages can be compressed into the formulae of a twentieth century shrewish Samuel Smiles? How does she imagine that she and her Government have every right to hurl out of the window all the evidence, experience, knowledge and wisdom that Western industrial society has been able to accumulate over the ages—perticularly over the past two or three decades? All that experience is thrown aside by the right hon. Lady.
I believe that she has been reading again the articles of the right hon. Member for Down, South. In the article that he wrote in the Sunday Express this week, he set out the basis of that philosophy. This is what he said:
For 30 years and more, ever since the aftermath of the war, no government has for long enough succeeded in resisting the temptation to create inflation by spending more than it got in by taking or borrowing.
Perhaps some right hon. and hon. Members believe that. I am sure the Prime Minister does because she has reiterated it on numerous occasions. But the trouble with that theory has always been that it proves too much. It is the thirteenth stroke of the clock which casts suspicion on all the others. If it is true that what is wrong with our society is what we have been pursuing for 30 years, then the right hon. Member for Down, South is wiping off altogether the only period in our history when we have had something approaching full employment. [Interruption.] I know that there are still a few hon. Members who continue to shake their heads on this matter but they are becoming fewer. I do not believe that there are so many hon. Members on the Government


Benches who believe in the Government's policy. Hands up those who really believe. [Interruption.] Is there any advance on seven? I thought there were eight—we do not want any miscounts here. That showed the passion that the right hon. Lady has stirred up. If that happens after one of her speeches, what happens before?
I am not one of those who believes that the Prime Minister should be underrated in any sense at all. I do not think that she will change her policies dramatically. I do not see why she should be so discomfited about the possibility of a U-turn. Her only success—one can count it on the thumb of one hand—was the result of a U-turn. That was Zimbabwe. On that matter, the right hon. Lady carried out our policy, and good luck to her.

The Secretary of State for the Home Department (Mr. William Whitelaw): No, no, that is not true.

Mr. Foot: I do not know why the Home Secretary is splitting a blood vessel. I am sure that the Government do not have any complaints about the generosity and the discrimination that we displayed in supporting them on that subject. However, I repeat that I do not underrate the right hon. Lady. I do not believe that she will lose her nerve. I have never believed that. However, I believe that she will lose her compassion. That is what happened when she came to Swansea the other day.
I do not want to misquote. I am quoting the Western Mail and one has to be careful with that newspaper. I shall read the real headline first:
Thatcher law: Move where jobs are.
I remind the House that that is from the Western Mail. It should have the headline tomorrow "Lapdog bites lady". That also happened. If the right hon. Lady reads that newspaper she will discover what is thought about her.
I hope that she will understand why in Wales we believe that her remarks showed a vast and monstrous misapprehension of the situation. It is not only that there are no places for people to move to in order to get jobs in Wales or elsewhere, important though that is. It is also because of the memories that she revived.
My hon. Friends will recall the incident described by my predecessor in Ebbw Vale in his book "In Place of Fear". He described a conversation that he had with a miner friend of his from Blaina in the early 1920s. They were discussing emigration. Jim Minton told Nye that he was going to clear off and emigrate to another country. [Interruption.] I know that Conservative Members do not understand these matters. That is why they are unfit to govern the country. Jim Minton said that he was going because he believed that there was no future in this country. Nye that night told his father of the conversation but said that he believed that it was necessary to stay and fight it out. That is what we shall do. We shall fight the Government with every power that we have. What the right hon. Lady and her Government have proved during these fraught, terrible 15 months is that what is at stake is the salvation of the country. That is what we are voting about tonight.

The Chancellor of the Exchequer (Sir Geoffrey Howe): No one who has listened to the right hon. Member for Ebbw Vale (Mr. Foot) doubts, and no one ever would doubt, the depth of his convictions about the horrors of unemployment. However, we are entitled to say, because it is true, that we on this side of the House share that conviction totally. It is one of the more remarkable, tragic and despicable facts about the Opposition that they are so unwilling to acknowledge that they do not have a monopoly in compassion. It has to be said that the right hon. Gentleman, speaking in this House on the subect of unemployment, no longer carries the conviction that he once did when discussing that subject. Ten years ago, before the right hon. Gentleman had been tainted by office, he wrote by way of judgment on the record of the first Government of the right hon. Member for Huyton (Sir H. Wilson):
the toleration or acceptance of unemployment as at the level of 600,000 was the worst domestic crime committed by Labour in office.
He had quite a catalogue of crimes to choose from, but he chose that. Four years later, the right hon. Gentleman was appointed Secretary of State for Employment and took over from the outgoing Conservative Government a rather


lower figure of unemployment, at 575,000. He remained in office as Secretary of State for Employment until 8 April 1976. What happened during his tenure of office? The numbers out of work while he presided over employment increased by more than the total that he had previously regarded as his party's worst crime, and went up to a total of 1¼ million. During the right hon. Gentleman's 25 months at the Department of Employment, the number of those out of work increased by 1,000 every working day.
I do not want to be unfair to the right hon. Gentleman, but, against that record, the House does not find it easy to take seriously his contribution to the debate. When the unemployment figure topped 1¼ million, the right hon. Gentleman surrendered his position at the Department of Employment. But for what purpose? Only in order to challenge the present Leader of the Opposition in the election for the leadership of the Labour Party. The right hon. Gentleman was entitled to take part in that election. He collected 137 votes and has served since as the deputy leader of the Labour Party.
While the right hon. Gentleman was deputy leader, unemployment under the Labour Government rose to a total of 1·6 million. That is why we listen to his speeches on unemployment with less respect than we used to do. The right hon. Gentleman's continued eminence in the Labour Party, which we welcome, is proof positive of the non-fulfilment of one of the wishes of John Maynard Keynes who said 50 years ago that he hoped that the Labour Party would be
something more than an almshouse for retired agitators.
If ever there were a retired agitator, it is the right hon. Member for Ebbw Vale.
We do not say that the Labour Government wanted to double unemployment. We do not say that they alone were responsible for it. But we do say that, in view of the Labour Government's record, Labour Members should not be surprised if the nation is no longer impressed by the irresponsible opportunism of their attitude.
It is important for us to consider why unemployment has grown. It must surely be acknowledged that there are powerful international, world-wide factors at work

—a global recession, an explosion of oil prices, technological change that is destroying old jobs more quickly than new jobs can be created, the arrival of newly industrialised countries. The result is that, although unemployment in this country is too high at 6½ per cent., the figure in France, the United States and Italy is 7·7 per cent. In Belgium it is as high as 11½ per cent. There are only two major countries with unemployment levels below our own. They are Germany and Japan, the two countries with the lowest inflation rate and the highest productivity rate.
I invite the right hon. Gentleman to agree that, in the face of those figures, it is absurd for anyone to suggest that the major cause of unemployment rests with the present Government. The trouble arises—

Mr. Foot: I respond to the invitation of the right hon. and learned Gentleman because he has asked me to intervene. Can he tell us when he mentioned those figures about the world recession at the time of the general election?

Sir G. Howe: I would rather tell the right hon. Gentleman that the words that I have just quoted, to the effect that it is absurd for anyone to suggest that the major cause of unemployment rests with the present Government, are words used by himself in 1975. He went on to say, and it is as true now as it was five years ago:
… the trouble arises from the recession which has hit many countries beside our own. Our capacity to overcome the menace will depend on a combination of policies, not least and immediately upon our success in curbing inflation."—[Official Report, 1 July 1975; Vol. 894, c. 1170.]
So, the right hon. Gentleman thought that the conquest of inflation came before the conquest of unemployment.
If we are to judge by the speech of the Leader of the Opposition today, there may now be some re-ordering of priorities in the Labour Party. It is now difficult to tell which comes first—the conquest of inflation or the conquest of unemployment. If we are to talk of U-turns, we should seek such U-turns in the Labour Party.
Let me examine for a moment some of the measures that have been suggested for dealing with unemployment—some of


the less painful options. I admired the speech of my right hon. Friend the Member for Yeovil (Mr. Peyton), who said, with such accuracy, that one of the problems of our society has been the extent to which we have persistently sought painless remedies when none are available. The same message was uttered by my hon. Friend the Member for Edinburgh, South (Mr. Ancram), who complained of the persistence of the rescue mentality. If we look at these apparently easy options they are not what they are made out to be.
For the first time today the Leader of the Opposition was committing his party to a substantial and significant programme of import controls. I am glad to say that my hon. Friend the Member for Croydon, South (Sir W. Clark) spoke out clearly against that. My hon. Friend advanced robust arguments, and I shall now examine them.
As my right hon. Friend the Prime Minister said, one-third of the nation's output is exported. We, least of all, can afford to embark upon a pattern of import controls. All our trade depends upon countries being willing to import from us. If we embark upon a trade war, we operate, as the right hon. Member for Leeds, East (Mr. Healey) has said on many occasions, to our own disadvantage.
I take as an example the plant of the Ford Motor Company in Bridgend, for which the Leader of the Opposition, rightly, claimed some responsibility. What would be the implications for that plant if we embarked upon a pattern of import control and upon a competitive trade war? It is intended that two-thirds of the output of our investment at Bridgend is to be exported to other countries. How can we expect to do that if, at the same time, we are putting up import controls against our competitors? That is a soft option which makes no sense.

Mr. John Morris: Is not the right hon. and learned Gentleman aware that Sir Terence Beckett and his colleagues are currently advocating that sterner measures should be imposed to stop Japanese goods from coming into this country and into Europe, otherwise there will be no motor industry left in this country or in Europe?

Sir G. Howe: I know that Sir Terence Beckett and his colleagues support some degree of reciprocity. However, the huge gap in productivity and performance between the factories in Europe and those in Japan concerns Sir Terence and his colleagues more. We might yearn as much as we like for import controls but we cannot stop that. That is one option that we must discard.
What of the second suggestion, proffered by the Leader of the Opposition and others, that we should intervene to affect the exchange rate? The Leader of the Liberal Party also made that suggestion. The right hon. Member for Down, South (Mr. Powell) referred to the artificially high exchange rate. Who knows? We cannot tell because the exchange rate is determined by the market. [HON. MEMBERS: "Whose market?"] Apart from that there is a good case for lowering interest rates if that can be achieved.
Let us examine the attempts that have been made to affect the exchange rate. Much valuable evidence on that subject was given to the Public Accounts Committee, presided over by my right hon. Friend the Member for Taunton (Mr. du Cann). The evidence from the Swiss National Bank shows that the exchange rate cannot be controlled without losing control of the appropriate monetary target. The evidence given by the Governor of the Bank of England was to the same effect. He said that although it might be of some short-term value, in the end it would be seen to be a hopeless endeavour.
If we search for evidence of even more substance we find that the right hon. Member for Leeds, East attempted throughout the greater part of 1977 to intervene in order to hold the exchange rate down. At the end of October that year, because he was overwhelmed by the sheer weight of money in the market places, he decided that a continuance of inflows on a large scale could endanger continued adherence to the domestic monetary targets. The attempt to control the exchange rate was abandoned then, as it would have to be abandoned if it were attempted now.

Mr. Robert Sheldon: The right hon. and learned Gentleman does not need to go so far abroad to obtain evidence on this matter. He has the London clearing banks' memorandum which lays down a


number of methods by which the exchange rate could be reduced. Why does he not pay attention to them?

Sir G. Howe: The London clearing banks' memorandum is to the same effect. It says that any attempt to control the exchange rate would be short-lived and ineffective. It describes the possibility of using inflow controls and refers to the experience of countries that have tried them, such as Switzerland and Germany. Would it not be nice if attractive and easy cures were available? However, they are not.
The controls that one would have to erect would become increasingly ineffective. They would not be effective for more than a short term. They would pose particularly damaging difficulties for financial centres such as the City of London.
The Leader of the Liberal Party suggested that we should consider the indexation of Government debt. Representations from inside and outside the House have been made to the effect that we should examine the possibility of finding new instruments for covering Government debt. Nobody's mind should be closed to such a possibility. It is important to consider the effect on the foreign exchange market of establishing for the first time attractive indexed instruments in this country. It is important to consider the effect on the industrial markets of a Government instrument which was indexed in that way. We must also consider the effect on personal savings and on building societies. It is clear that that which looks attractive at first sight raises counter-difficulties and cannot be lightly undertaken.
Another attractive possibility that has been suggested is that we should be making more constructive use of North Sea oil revenues. What is overlooked is that the North Sea oil revenues are already flowing into the Exchequer and are being used to finance, for example, the enterprise package of tax reductions that I introduced in this year's Budget. They are being used, and should be used, to keep down interest rates. They are being used to bring down borrowing.
The Leader of the Opposition offered a different approach to the whole problem. The right hon. Gentleman offered what he described as an alternative that

the Government should seriously consider. I want to examine what he proposed. The right hon. Gentleman suggested that we should consider lowering interest rates and expanding public expenditure and that these things could be done consistently with maintaining a sensible economic policy. He sought to pray in aid in support of the policy the evidence of Professor Milton Friedman. I understood the Leader of the Opposition to say that it was possible, according to Milton Friedman, to expand the public sector borrowing requirement regardless of the impact because there was no relationship between it and the money supply. That is not the effect of what Professor Friedman was saying. This is an important point to understand.
There is a relationship between the money supply target and the public sector borrowing requirement and interest rates. If one is seeking to put all three alongside each other, as one must, it is not possible, in pursuing a given money supply target, to increase public sector borrowing without, at the same time, raising interest rates. It is the right hon. Gentleman's attempt to try to achieve all these things at the same time which causes us so much concern.
The Leader of the Opposition seeks to relax control of borrowing by expanding the money supply targets and, at the same time, lowering interest rates. I have to tell him that this is simply not possible. If the right hon. Gentleman is serious about wanting to adhere to monetary targets, it is not possible for him to increase public sector borrowing without having a corresponding upward impact on interest rates. This point was made clearly by the right hon. Member for Down, South. It seems that the Opposition are seeking, as my right hon. Friend the Prime Minister pointed out, to go for lower interest rates and higher spending, financed by higher borrowing and accompanied by a higher monetary target. What they are seeking to achieve is more of everything but less financial responsibility. What they will deliver if they pursue these policies—it is important for the House to be clear about this new intention—is higher inflation, higher inflation still and, in due course, higher unemployment.
The right hon. Gentleman has set for his party the explicit objective of bringing


down unemployment even if it means pushing up inflation. The question that the House has to ask itself is whether that prescription, even if desirable, will work and whether it will work for more than a short time. It is a prescription that was considered by the Labour Party when in office. In 1975 the right hon. Member for Ebbw Vale said:
One fundamental requirement before we can secure a substantial improvement
in employment
is to bring down the domestic rate of inflation."—[Official Report, 24 July 1975; Vol. 896, c. 783.]
At that time, when he had responsibility for these matters, the right hon. Gentleman recognised the necessity to get inflation down before there was any real prospect of unemployment coming down. The right hon. Member for Leeds, East was even more explicit in rejecting the prescription now offered by his right hon. Friend in a broadcast made on behalf of the Labour Party on 5 December 1975. [Interruption.] I am astonished that the Labour Party should be surprised at our expecting it to be consistent from one year to the next. The right hon. Gentleman said:
It is no good trying to deal with unemployment in ways which would simply set inflation racing up again. That would just make unemployment even worse.
It is exactly that course that we reject today.
The analysis given by the Leader of the Opposition was totally at variance with what has been offered by the right hon. Member for Ebbw Vale tonight. I quote from his speech to the Blackpool conference in 1976 when he said
We must ask ourselves unflinchingly what is the cause of high unemployment. We used to think that you could … increase employment by cutting taxes and boosting Government spending. I tell you in all candour that that option no longer exists and that in so far as it ever did exist it worked by injecting inflation into the economy. And each time that happened the average level of unemployment has risen. Higher inflation followed by higher unemployment. That is the history of the last 20 years.
If that were true when the right hon. Gentleman uttered it in 1976, why is it not true today? We have been treated to a history lesson from the right hon. Member for Ebbw Vale telling us that the past 40 years have been a history

of the dedication of successive Governments in this country to full employment. So, indeed, for some in aspiration it has been. However, the record of what has happened was in the speech of the Leader of the Opposition. The history of the past 20 years has been
Higher inflation followed by higher unemployment."—[Official Report, 28 February 1980; Vol. 979, c. 1695.]
If that were true then, why is it not true today? Why is it right today for the right hon. Gentleman and his party to begin committing themselves to a totally different pattern of priorities, to say that we need no longer concern ourselves with the conquest of inflation but must put the conquest of unemployment first? Does the right hon. Gentleman accept that that is the analysis that he made? His analysis was clear. He was arguing for an increase in the monetary targets, for a reduction in interest rates and for the acceptance of higher inflation.
The Labour Party, and particularly its Leader, once claimed to be the only true inheritors of monetary policy. The right hon. Member for Leeds, East described us as "punk monetarists". What is the position of the Labour Party? The right hon. Gentleman was willing to accept monetarism if he were obliged by responsibility to do so, but he is only too ready to abandon monetarism today when that is convenient. The Labour Party consists not of punk monetarists but of funk monetarists, running away from the obligations which a true monetarist policy imposes. [Interruption.]

Mr. Speaker: Order.

Mr. Skinner: On a point of order, Mr. Speaker. Since the Chancellor of the Exchequer has lost his notes and appears for the moment to be unable to proceed with his speech, I wonder whether we can have the Paymaster General back.

Sir G. Howe: The Leader of the Opposition has apparently now summoned up sufficient courage to repudiate the policies in which he himself once believed. We are anxious to know now where he stands.
The other day we were treated to the publication by the Labour Party of its draft manifesto, 1980. The House would like to know whether the Leader of the Opposition accepts any responsibility


whatsoever for that grotesque document. We know that it is a document for which the right hon. Member for Bristol, South-East (Mr. Benn) accepts some responsibility. Indeed, it is a most remarkable document to place before the nation. We know that the Leader of the Opposition is anxious to make a modest increase in public spending and is anxious to accept a gentle increase in inflation. But is he prepared to accept the absurd document produced by the national executive committee of the Labour Party?
We have been working out what would be the cost to the nation of the so-called draft manifesto, produced by the Labour Party. We find that that document contains proposals for nationalisation on a scale so substantial that it will cost £35 billion. Does the Leader of the Opposition accept that? [Interruption.] We find that the draft manifesto would—[Interruption.]—commit the Exchequer to an added annual cost of £30 billion. Does the Leader of the Opposition accept that?

Mr. Speaker: Order. It is unreasonable to keep interrupting when someone else is speaking. Hon. Members must have a sense of fair play.

Mr. James Wellbeloved (): On a point of order, Mr. Speaker. Would you help the House? On a number of occasions in recent times it has been apparent that there is something wrong with the acoustics of this place. I wonder whether you would ask the chief engineer of Parliament to examine the loudspeakers to ensure that those on your left and right are working fairly?

Mr. Speaker: Order. The hon. Gentleman may well feel better now that he has said it—but it was not very clever.

Mr. Wellbeloved: Mr. Wellbeloved rose—

Mr. Speaker: Order. I shall not take another point of order from the hon. Gentleman at this stage.

Sir G. Howe: I return to the question that I was asking. The draft manifesto of the Labour Party would commit the Exchequer to an additional expenditure of £30,000 million, more than eight times as much as the total revenue from North Sea oil. If that is the proposition, is the Labour Party committed to it? I ask the Leader of the Opposition to reflect on the reality of what he said when he last had responsibility for these matters. He had this to say:
I warn the House that if we were to increase the borrowing requirement we would have an increase in inflation once more and we should all be on the same old merry go round, except that it would be a tragedy.
What he said then was right. It is just as right today. He said then—and I adopt his words—
I make it clear that we do not intend as a Government to finance inflation. We intend to adhere to monetary targets with inevitable effects both on the level of activity in the economy and on the level of unemployment.
I quote throughout from the Leader of the Opposition. When in power he said:
 The Government do not prefer these alternatives. They are not our choice. However, we reject the alternative of allowing inflation to increase unchecked. If we do that, we shall all be far worse off in the long run."—[Official Report, 16 January 1979; Vol. 960, c. 1154–5.]
Those were the words of the Leader of the Opposition, who then had responsibility for these matters. They were true then and he knows that they are just as true today. For that reason, I invite the House to reject the motion.

Question put:—

The House divided: Ayes 274, Noes 333.

Cowans, Harry
Howells, Geraint
Prescott, John


Cox, Tom (Wandsworth, Tooting)
Huckfield, Les
Price, Christopher (Lewisham West)


Craigen, J. M. (Glasgow, Maryhill)
Hudson Davies, Ednyfed (Caerphilly)
Race, Reg


Crowther, J. S.
Hughes, Mark (Durham)
Radice, Giles


Cryer, Bob
Hughes, Robert (Aberdeen North)
Rees, Rt Hon Merlyn (Leeds South)


Cunliffe, Lawrence
Hughes, Roy (Newport)
Richardson, Jo


Cunningham, George (Islington S)
Janner, Hon Greville
Roberts, Albert (Normanton)


Cunningham, Dr. John (Whitehaven)
Jay, Rt Hon Douglas
Roberts, Allan (Bootle)


Dalyell, Tarn
John, Brynmor
Roberts, Ernest (Hackney North)


Davidson, Arthur
Johnson, James (Hull West)
Roberts, Gwilym (Cannock)


Davies, Rt Hon Denzil (Llanelli)
Johnson, Walter (Derby South)
Robinson, Geoffrey (Coventry NW)


Davies, Ifor (Gower)
Johnston, Russell (Inverness)
Rodgers, Rt Hon William


Davis, Clinton (Hackney Central)
Jones, Barry (East Flint)
Rooker, J. W.


Davis, Terry (B'rm'ham, Stechford)
Jones, Dan (Burnley)
Roper, John


Deakins, Eric
Kaufman, Rt Hon Gerald
Ross, Ernest (Dundee West)


Dean, Joseph (Leeds West)
Kerr, Russell
Ross, Stephen (Isle of Wight)


Dempsey, James
Kilroy-Silk, Robert
Rowlands, Ted


Dewar, Donald
Kinnock, Nell
Ryman, John


Dixon, Donald
Lamble, David
Sandelson, Neville


Dobson, Frank
Lamborn, Harry
Sever, John


Dormand, Jack
Leadbitter, Ted
Sheerman, Barry


Douglas, Dick
Leighton, Ronald
Sheldon, Rt Hon Robert (A'ton-u-L)


Douglas-Mann, Bruce
Lestor, Miss Joan (Eton & Slough)
Short, Rt Hon Peter (Step and Pop)


Dubs, Alfred
Lewis, Arthur (Newham North West)
Short, Mrs René e


Duffy, A. E. P.
Lewis, Ron (Carlisle)
Silkin, Rt Hon John (Deptford)


Dunlop, John
Lofthouse, Geoffrey
Silkin, Rt Hon S. C. (Dulwich)


Dunn, James A. (Liverpool, Kirkdale)
Lyon, Alexander (York)
Silverman, Julius


Dunnett, Jack
Lyons, Edward (Bradford West)
Skinner, Dennis


Dunwoody, Mrs. Gwyneth
Mabon, Rt Hon Dr J. Dickson
Smith, Cyril (Rochdale)


Eadie, Alex
McCartney, Hugh
Smith, Rt Hon J. (North Lanarkshire)


Eastham, Ken
McDonald, Dr Oonagh
Snape, Peter


Edwards, Robert (Wolv SE)
McElhone, Frank
Soley, Clive


Ellis, Raymond (NE Derbyshire)
McKay, Allen (Penistone)
Spearing, Nigel


Ellis, Tom (Wrexham)
McKelvey, William
Stallard, A. W.


English, Michael
MacKenzle, fit Hon Gregor
Steel, Rt Hon David


Ennals, Rt Hon David
Maclennan, Robert
Stewart, Rt Hon Donald (W Isles)


Evans, loan (Aberdare)
McMahon, Andrew
Stoddard, David


Evans, John (Newton)
McNally, Thomas
Stott, Roger


Faulds, Andrew
McNamara, Kevin
Strang, Gavin


Field, Frank
McQuade, Jonn
Straw, Jack


Fitch, Alan
McWiIIiam, John
Summerskill, Hon Dr Shirley


Fitt, Gerard
Magee, Bryan
Taylor, Mrs Ann (Bolton West)


Flannery, Martin
Marks, Kenneth
Thomas, Dafydd (Merioneth)


Fletcher, L. R. (Ilkeston)
Marshall, David (Gl'sgow, Shettles'n)
Thomas, Jeffrey (Abertillery)


Fletcher, Ted (Darlington)
Marshall, Dr Edmund (Goole)
Thomas, Mike (Newcastle East)


Foot, Rt Hon Michael
Marshall, Jim (Leicester South)
Thomas, Dr Roger (Carmarthen)


Ford, Ben
Martin, Michael (Gl'gow, Springb'rn)
Thorne, Stan (Preston South)


Forrester, John
Mason, Rt Hon Roy
Tilley, John


Foster, Derek
Maxton, John
Tinn, James


Foulkes, George
Maynard, Miss Joan
Torney, Tom


Fraser, John (Lambeth, Norwood)
Meacher, Michael
Urwin, Rt Hon Tom


Freeson, Rt Hon Reginald
Mellish, Rt Hon Robert
Varley, Rt Hon Eric G.


Freud, Clement
Mikardo, Ian
Wainwright, Edwin (Dearne Valley)


Garrett, John (Norwich S)
Millan, Rt Hon Bruce
Wainwright, Richard (Colne Valley)


Garrett, W. E. (Wallsend)
Miller, Dr M. S. (East Kilbride)
Walker, Rt Hon Harold (Doncaster)


George, Bruce
Mitchell, Austin (Grimsby)
Weetch, Ken


Gilbert, Rt Hon Dr John
Mitchll, R. C. (Soton, Itchen)
Wellbeloved, James


Ginsburg, David
Morris, Rt Hon Alfred (Wythenshawe)
Welsh, Michael


Golding, John
Morris, Rt Hon Charles (Openshaw)
White, Frank R. (Bury & Radcliffe)


Gourlay, Harry
Morris, Rt Hon John (Aberavon)
White, James (Glasgow, Pollok)


Graham, Ted
Morton, George
Whitehead, Phillip


Grant, George (Morpeth)
Moyle, Rt Hon Roland
Whitlock, William


Grant, John (Islington C)
Mully, Rt Hon Frederick
Wigley, Dafydd


Grimond, Rt Hon J.
Newens, Stanley
Willey, Rt Hon Frederick


Hamilton. W. W. (Central Fife)
Oakes, Rt Hon. Gordon
Williams, Rt Hon Alan (Swansea W)


Hardy, Peter
Ogden, Eric
Williams, Sir Thomas (Warrington)


Harrison, Rt Hon Walter
O'Halloran, Michael
Wilson, Gordon (Dundee East)


Hart, Rt Hon Dame Judith
O'Neill, Martin
Wilson, William (Coventry SE)


Hattersley, Rt Hon Roy
Orme, Rt Hon Stanley
Winnick, David


Haynes, Frank
Owen, Rt Hon Dr David
Woodall, Alec


Healey, Rt Hon Denis
Paisley, Rev Ian
Woolmer, Kenneth


Heffer, Eric S.
Palmer, Arthur
Wrigglesworth, Ian


Hogg, Norman (E Dunbartonshire)
Park, George
Wright, Sheila


Holland, Stuart (L'beth, Vauxhall)
Parker, John
Young, David (Bolton East)


Home Robertson, John
Parry, Robert



Homewood, William
Pavitt, Laurie
TELLERS FOR THE AYES:


Hooley, Frank
Pendry, Tom
Mr. James Hamilton and


Horam, John
Penhaligon, David
Mr. Donald Coleman.


Howell, Rt Hon Denis (B'ham, Sm H)
Powell, Raymond (Ogmore)

Division No. 433]
AYES
[10 pm]


Abse, Leo
Benn, Rt Hon Anthony Wedgwood
Callaghan, Jim (Middleton & P)


Adams, Allen
Bennett, Andrew (Stockport N)
Campbell, Ian


Allaun, Frank
Bidwell, Sydney
Campbell-Savours, Dale


Alton, David
Booth, Rt Hon Albert
Canavan, Dennis


Anderson, Donald
Boothroyd, Miss Betty
Cant, R. B.


Archer, Rt Hon Peter
Bottomley, Rt Hon Arthur (M'brough)
Carmichael, Neil


Armstrong, Rt Hon Ernest
Bradley, Tom
Carter-Jones, Lewis


Ashley, Rt Hon Jack
Bray, Dr Jeremy
Cartwright, John


Ashton, Joe
Brown, Hugh D. (Provan)
Clark, Dr. David (South Shields)


Atkinson, Norman (H'gey, Tott'ham)
Brown, Robert C. (Newcastle W)
Cocks, Rt Hon Michael (Bristol S)


Bagier, Gordon A. T.
Brown, Ronald W. (Hackney S)
Cohen, Stanley


Barnett, Guy (Greenwich)
Brown, Ron (Edinburgh, Leith)
Concannon, Rt Hon J. D.


Barnett, Rt Hon Joel (Heywood)
Buchan, Norman
Conlan, Bernard


Beith, A. J.
Callaghan, Rt Hon J. (Cardiff SE)
Cook, Robin F.




NOES


Adley, Robert
Alison, Michael
Arnold, Tom


Aitken, Jonathan
Amery, Rt Hon Jullan
Aspinwall, Jack


Alexander, Richard
Ancram, Michael
Atkins, Rt Hon H. (Spelthorne)

Atkins, Robert (Preston North)
Fletcher-Cooke, Charles
MacGregor, John


Atkinson, David (B'mouth, East)
Fookes, Miss Janet
MacKay, Jonn (Argyll)


Baker, Kenneth (St. Marylebone)
Forman, Nigel
Macmillan, Rt Hon M. (Farnham)


Baker, Nicholas (North Dorset)
Fowler, Rt Hon Norman
McNair-Wilson, Michael (Newbury)


Banks, Robert
Fox, Marcus
McNair-Wilson, Patrick (New Forest)


Beaumont-Dark, Anthony
Fraser, Rt Hon H. (Stafford & St)
McQuarrie, Albert


Bell, Sir Ronald
Fraser, Peter (South Angus)
Madel, David


Bendall, Vivian
Fry, Peter
Major, John


Bennett, Sir Frederic (Torbay)
Galbraith, Hon T. G. D.
Marland, Paul


Benyon, Thomas (Abingdon)
Gardiner, George (Reigate)
Marlow, Tony


Benyon, W. (Buckingham)
Gardner, Edward (South Fylde)
Marshall, Michael (Arundel)


Best Keith
Garel-Jones, Tristan
Marten, Nell (Banbury)


Bevan, David Gilroy
Gilmour, Rt Hon Sir Ian
Mates, Michael


Biffen, Rt Hon John
Glyn, Dr Alan
Mather, Carol


Biggs-Davison, John
Goodhart, Philip
Maude, Rt Hon Angus


Blackburn, John
Goodhew, Victor
Mawby, Ray


Body, Richard
Goodlad, Alastair
Mawhinney, Dr Brian


Bonsor, Sir Nicholas
Gorst, John
Maxwell-Hyslop, Robin


Boscawen, Hon Robert
Gow, Ian
Mayhew, Patrick


Bottomley, Peter (Woolwich West)
Grant, Anthony (Harrow C)
Mellor, David


Bowden, Andrew
Gray, Hamish
Meyer, Sir Anthony


Boyson, Dr Rhodes
Greenway, Harry
Miller, Hal (Bromsgrove & Redditch)


Bradford, Rev. R.
Grieve, Percy
Mills, lain (Meriden)


Braine, Sir Bernard
Griffiths, Eldon (Bury St Edmunds)
Mills, Peter (West Devon)


Bright, Graham
Griffiths, Peter (Portsmouth N)
Miscampbell, Norman


Brinton, Tim
Grist, Ian
Mitchell, David (Basingstoke)


Brittan, Leon
Gryils, Michael
Moate, Roger


Brocklebank-Fowler, Christopher
Gummer, John Selwyn
Molyneaux, James


Brooke, Hon Peter
Hamilton, Hon Archie (Eps'm&Ew'll)
Monro, Hector


Brotherton, Michael
Hamilton, Michael (Salisbury)
Montgomery, Fergus


Brown, Michael (Brigg & Sc'thorpe)
Hampson, Dr Keith
Moore, John


Browne, John (Winchester)
Kannam, John
Morgan, Geraint


Bruce-Gardyne, John
Haselhurst, Alan
Morris, Michael (Northampton, Sth)


Bryan, Sir Paul
Hastings, Stephen
Morrison, Hon Charles (Devizes)


Buchanan-Smith, Hon Alick
Havers, Rt Hon Sir Michael
Morrison, Hon Peter (City of Chester)


Buck, Antony
Hawkins, Paul
Mudd, David


Budgen, Nick
Hawksley, Warren
Murphy, Christopher


Bulmer, Esmond
Hayhoe, Barney
Myles, David


Butcher, John
Heath, Rt Hon Edward
Neale, Gerrard


Butler, Hon Adam
Heddle, John
Needham, Richard


Cadbury, Jocelyn
Henderson, Barry
Nelson, Anthony


Carlisle, John (Luton West)
Heseltine, Rt Hon Michael
Neubert, Michael


Carlisle, Kenneth (Lincoln)
Higgins, Rt Hon Terence L.
Newton, Tony


Carlisle, Rt Hon Mark (Runcorn)
Hill, James
Normanton, Tom


Chalker, Mrs. Lynda
Hogg, Hon Douglas (Grantham)
Nott, Rt Hon John


Channon, Paul
Holland, Philip (Carlton)
Onslow, Cranley


Chapman, Sydney
Hooson, Tom
Oppenheim, Rt Hon Mrs Sally


Churchill, W. S.
Hordern, Peter
Osborn, John


Clark, Hon Alan (Plymouth, Sutton)
Howe, Rt Hon Sir Geoffrey
Page, John (Harrow, West)


Clark, Sir William (Croydon South)
Howell, Rt Hon David (Guildford)
Page, Rt Hon Sir Graham (Crosby)


Clarke, Kenneth (Rushcliffe)
Howell, Ralph (North Norfolk)
Page, Richard (SW Hertfordshire)


Clegg, Sir Walter
Hunt, David (Wirral)
Parkinson, Cecil


Cockeram, Eric
Hunt, John (Ravensbourne)
Parris, Matthew


Colvin, Michael
Hurd, Hon Douglas
Patten, Christopher (Bath)


Cope, John
Irving, Charles (Cheltenham)
Patten, John (Oxford)


Cormack, Patrick
Jenkin, Rt Hon Patrick
Pattie, Geoffrey


Corrie, John
Jessel, Toby
Pawsey, James


Costain, A. P.
Johnson Smith, Geoffrey
Percival, Sir Ian


Cranborne, Viscount
Jopling, Rt Hon Michael
Peyton, Rt Hon John


Critchley, Julian
Joseph, Rt Hon Sir Keith
Pink, R. Bonner


Crouch, David
Kaberry, Sir Donald
Pollock, Alexander


Dean, Paul (North Somerset)
Kellett-Bowman, Mrs Elaine
Porter, Barry


Dickens, Geoffrey
Kershaw, Anthony
Powell, Rt Hon J. Enoch (S Down)


Dorrell, Stephen
Kimball, Marcus
Prentice, Rt Hon Reg


Douglas-Hamilton, Lord James
King, Rt Hon Tom
Price, Sir David


Dover, Denshore
Kitson, Sir Timothy
Prior, Rt Hon James


du Cann, Rt Hon Edward
Knight, Mrs Jill
Proctor, K. Harvey


Dunn, Robert (Dartford)
Knox, David
Pym, Rt Hon Francis


Durant, Tony
Lamont, Norman
Ralson, Timothy


Dykes, Hugh
Lang, Ian
Rathbone, Tim


Eden, Rt Hon Sir John
Langford-Holt, Sir John
Rees, Peter (Dover and Deal)


Edwards, Rt Hon N. (Pembroke)
Latham, Michael
Rees-Davies, W. R.


Eggar, Timothy
Lawrence, Ivan
Renton, Tim


Elliott, Sir William
Lawson, Nigel
Rhodes James, Robert


Emery, Peter
Lee, John
Rhys Williams, Sir Brandon


Eyre, Reginald
Lennox-Boyd, Hon Mark
Ridley, Hon Nicholas


Fairbairn, Nicholas
Lester, Jim (Beeston)
Ridsdale, Julian


Fairgrieve, Russell
Lewis, Kenneth (Rutland)
Rifkind, Malcolm


Faith, Mrs Sheila
Lloyd, Ian (Havant & Waterloo)
Rippon, Rt Hon Geoffrey


Farr, John
Lloyd, Peter (Fareham)
Roberts, Michael (Cardiff NW)


Fell, Anthony
Loveridge, John
Roberts, Wyn (Conway)


Fenner, Mrs Peggy
Luce, Richard
Ross, Wm. (Londonderry)


Finsberg, Geoffrey
Lyell, Nicholas
Rossi, Hugh


Fisher, Sir Nigel
McCrindle, Robert
Rost, Peter


Fletcher, Alexander (Edinburgh N)
Macfarlane, Neil
Royle, Sir Anthony

Sainsbury, Hon Timothy
Stewart, Ian (Hitchin)
Walker-Smith, Rt Hon Sir Derek


St. John-Stevas, Rt Hon Norman
Stewart, Allan (East Renfrewshire)
Wall, Patrick


Scott, Nicholas
Stokes, John
Waller, Gary


Shaw, Giles (Pudsey)
Stradling Thomas, J.
Walters, Dennis


Shaw, Michael (Scarborough)
Tapsell, Peter
Ward, John


Shelton, William (Streatham)
Taylor, Robert (Croydon NW)
Warren, Kenneth


Shepherd, Colin (Hereford)
Taylor, Teddy (Southend East)
Watson, John


Shepherd, Richard (Aldridge-Br'hills)
Tebbit, Norman
Wells, John (Maidstone)


Shersby, Michael
Temple-Morris, Peter
Wells, Bowen (Hert'rd & Stev'nage)


Silvester, Fred
Thatcher, Rt Hon Mrs Margaret
Wheeler, John


Sims, Roger
Thomas, Rt Hon Peter (Hendon S)
Whitelaw, Rt Hon William


Skeet, T. H. H.
Thompson, Donald
Whitney, Raymond


Smith, Dudley (War. and Leam'ton)
Thorne, Nell (Ilford South)
Wickenden, Keith


Speed, Keith
Thornton, Malcolm
Wiggin, Jerrry


Speller, Tony
Townend, John (Bridlington)
Wilkinson, John


Spence, John
Trippier, David
Williams, Delwyn (Montgomery)


Spicer, Jim (West Dorset)
van Straubenzee, W. R.
Winterton, Nicholas


Spicer, Michael (S Worcestershire)
Vaughan, Dr Gerard
Wolfson, Mark


Sproat, lain
Viggers, Peter
Young, Sir George (Acton)


Squire, Robin
Waddington, David
Younger, Rt Hon George


Stainton, Keith
Wakeham, John



Stanbrook, Ivor
Waldegrave, Hon William
TELLERS FOR THE NOES:


Stanley, John
Walker, Rt Hon. Peter (Worcester)
Mr. Spencer Le Marchant and


Steen, Anthony
Walker, Bill (Perth & E Perthshire)
Mr. Anthony Berry.


Stevens, Martin

Question accordingly negatived.

ACCIDENTS AT WORK

Mr. Harold Walker (): I beg to move,
That an humble Address be presented to Her Majesty, praying that the Notification of Accidents and Dangerous Occurrences Regulations 1980 (S.I., 1980, No. 804), dated 12th June 1980, a copy of which was laid before this House on 24th June, be annulled.
Although the regulations before the House stand in the name of the Under-Secretary of State for Employment, they have, of course, been introduced and produced by the Health and Safety Commission. Since its inception in 1974 the commission has been a strong and beneficial influence on the improvement in occupational health and safety in this country, and I am glad to have the opportunity tonight to pay tribute to its work. Because I support the commission, I take no pleasure in criticising these proposals.
Before I turn to the specific matters that give rise to our prayer I should like to make a brief general point. The principal purpose of the regulations is greatly to extend the area over which there is a statutory obligation to notify accidents and dangerous occurrences. That is to be welcomed, and I am sure that it would command the support of the whole House. However, if notification is not to degenerate into a mere gathering of statistics it is essential for there to be a matching increase in the resources and manpower available to the commission.
If the new regulations are to be effectively implemented they are bound to make additional demands on the Health and Safety Executive, yet the Government choose this time to impose further crippling cuts on the budget of the commission. To a present cut of 10 per cent. the Government propose to add a further cut of 8 per cent. That is a cut-by-cut approach to health and safety. Such a savage cutback—nearly one-fifth—can only imply that the Government are prepared cynically to abandon the aims of the 1974 Act and the philosophy on which it was based.
No doubt the Minister will take refuge in the pathetic argument that only defence and law and order are immune from the

cuts. But is this not a law and order question? Why is the enforcement of the criminal law in workers' health and safety to be given a lower priority than the issue of parking tickets?
I turn now to our objections to the regulations in their present form. First, there is the question of the vires of the proposals. The regulations are made under the provisions of the Health and Safety at Work etc. Act 1974. Section 1 (2) of the Act requires that any new regulations shall be such as will
maintain or improve the standards of health, safety and welfare established by or under those enactments.
The Minister and my hon. Friend the Member for Keighley (Mr. Cryer) know, perhaps more than any others, that those words in the 1974 Act were carefully chosen and deliberately inserted in response to anxieties expressed during the passage of the Bill through Parliament, and were intended to provide a statutory safeguard against any dilution of standards. As I said at the time, as the Minister responsible for the piloting of the legislation through the House, I did not intend those words to be a mere presentational embellishment.
Now, the Joint Committee on Statutory Instruments, in its thirty-sixth report, draws
the special attention of both Houses to four specific matters which appear to reduce or to dilute the existing standards.
I am delighted that my hon. Friend the Member for Keighley is present in the Chamber, because he is the Chairman of the Committee. It might therefore be sensible for me to leave him further to explain to the House why the Committee reported as it did. It reached a proper and correct conclusion.
If the Minister takes a contrary view to that of the Committee and myself and advises the House that the regulations are not ultra vires, would it not be open to an organisation or a person outside the House to test this issue in the courts? Surely, vires must ultimately be a matter for judicial determination. Despite the hon. and learned Gentleman's legal skill and knowledge, which we have learned to admire, this is not a matter on which Parliament can claim the last word.
After taking official advice from the Department of Employment, in the immediate post-enactment period I was


publicly saying that the issue might be open for action in the way that I have suggested.
I should like to add a further brief comment on the Committee's report before turning to other matters. In page 2 of the report of the Joint Committee on Statutory Instruments there appear the words:
The Committee was told in evidence that the intention of the Act was exhortatory and that prosecution would be used only as a last resort.
I do not know who said that to the Select Committee—perhaps my hon. Friend the Member for Keighley will tell us in due course—because the minutes of evidence are not yet published, but whoever said it had neither authority nor grounds for making such a statement. It is for Parliament to determine the intention of any Act. When the 1974 legislation was going through the House there was no suggestion by anyone, least of all myself, as the responsible Minister, that the Act was intended to be "exhortatory". That should go on record.
Schedule 5 of the regulations lists a series of statutory obligations to notify accidents that are to be repealed or revoked. I single out the proposed repeal of section 80 of the Factories Act 1961 as a good example of what is taking place as a result of these proposals. Section 80—a provision that has existed since at least 1937—provides:

"(1) Where an accident in a factory—

(a) causes loss of life to a person employed in the factory; or
(b) disables any such person for more than three days from earning full wages at the work at which he was employed;
written notice of the accident, in the prescribed form and accompanied by the prescribed particulars, shall forthwith be sent to the inspector for the district.
It goes on later to make provision for a penalty where the person responsible fails to give such notice.
Those words and the provisions in the other statutes listed in schedule 5 are to be replaced by regulation 7. I hope that the House noted carefully the mandatory obligation placed upon employers and occupiers of premises by section 80 of the Factories Act 1961. I said that it was typical of many of the other enactments listed for revocation or repeal in schedule

5. That provision is now to be replaced by regulation 7:
Where an employee suffers an injury as a result of an accident and his employer sends particulars of that accident to the Department of Health and Social Security, the Secretary of State shall give notice of the accident by sending a copy of those particulars to the Health and Safety Executive.
There is no statutory requirement that the accident must be notified, let alone any requirement to do it "forthwith", and there is no mention of any penalty for non-compliance. Whatever construction the Minister may put on those words, I cannot see how regulation 7 can be construed as a mandatory obligation to notify an accident that keeps a worker away from his job for the period set out in regulation 3 (1) (b).

Mr. Ronald W. Brown (): That does not mean that what the employer sends forward is the truth. He may manufacture his own interpretation of the accident.

Mr. Walker: I hope that my hon. Friend has noticed that regulation 7 does not impose any obligation on the employer to say anything. If the employer chooses to keep quiet he will not be committing any statutory offence. The wording seems to make notification by the employer virtually voluntary. I cannot understand how the House can accept such a proposal.
When the Under-Secretary replies, he may well say that I have taken too narrow a view of regulation 7. He may say that I have failed to understand how it will operate. How is it supposed to work? I understand that it is based on the assumption that if a worker is off work as a result of an accident for the period laid down in regulation 3 (1) (b), he will be eligible for industrial injury benefit. That is not always true. A worker may be disqualified from being eligible for many reasons.
However, I shall put aside the exceptions and pursue the general intention of the Health and Safety Commission and of the Government. If a worker claims benefit, the Department of Health and Social Security will require the employer to complete a form. The number of that form may be B1 76HSE. No doubt the Under-Secretary will give the correct number when he replies. Unfortunately, copies of the form are not available to


the House and we do not know what information the form will require. Nor do we have any assurance that the information required will not change from time to time. The form could have been a schedule to the regulations, and it is a pity that it is not.
Incidentally, under section 80 of the Factories Act a worker does not have to be off work for his accident to be notifiable. It is widely assumed that the worker must be off work for three days, and that only then is there an obligation for the employer or occupier to give notification of that. That is not so. The Act says that notification is required when the worker is unable to earn a full wage, although he may be at work on a different job and at lower rates of pay.
The DHSS will be required to send to the Health and Safety Executive a copy of the form that has been completed by the employer. In that way notification will be effected. It is claimed that there will be less form filling. In all the procedures no role has been designated for the safety representative. The regulations contain no mention of safety representatives. The most significant factor is that it seems that the Health and Safety Commission was unaware that the Government proposed to make the employer responsible for the first eight weeks of pay in the case of absence due to sickness.
There was some doubt whether the proposals contained in the Green Paper would encompass absence due to industrial injury. Therefore, I asked a parliamentary question. I received the answer that injury and absence due to industrial injury are within the scope of the proposals. The reply was qualified by reference to decisions that might be taken in the light of comments on the Green Paper. As long as there is a possibility that there will be no claim on the Department of Health and Social Security for eight weeks—or whatever other period the Government eventually choose—I cannot understand how the Health and Safety Commission can proceed with these regulations.
It would be sensible for the Government and the Health and Safety Commission to withdraw these proposals, pending the final determination of the Government's policy on benefit payment, and further to amend them in the light of

what I have said and others may say this evening. Unless they do so, millions of people in industry who look to this House for protection may find themselves with no notification procedure. If the proposals are not withdrawn, in the absence of absolute guarantees from the Government I shall have to ask the House, no matter how regretfully, to vote against them.

Mr. Bob Cryer (): The Minister would normally now reply to the cogent and well argued case put forward by my right hon. Friend the Member for Doncaster (Mr. Walker).
The Joint Committee on Statutory Instruments was set up by this House and the other place to scrutinise delegated legislation. The House should take notice of its report and act accordingly. The Committee was strongly of the view that in spite of the possibility that powers exist within the Health and Safety at Work etc. Act 1974, the prescribed forms of notification should be contained in the instrument. It was alarmed to discover that the Health and Safety Commission is apparently being given delegated powers by this legislation, outside and away from the House, to change forms as and when it chooses. Failure to complete a form is a criminal offence. We are not talking of a peripheral, halfhearted or inconsequential power.
The Department of Employment view is that the legislation does not involve criminal sanctions but is simply designed to exhort people to do good things, but if people did good things all the time we should not need legislation. We pass legislation and provide sanctions because people are not men of good will the whole time. We require people to alter their behaviour by virtue of those sanctions.
The minutes of evidence taken before the Committee are now in the Vote Office. A representative of the Department of Employment said:
If an employer filled up one of the older forms, in practice he would never be prosecuted on the basis of that older form which, having been superseded, would have no legal status or standing.
That form, failure to complete which is a criminal offence, will be changed by administrative fiat. It will not be brought


before Parliament. The representative explained that it should not be necessary to trouble Parliament with such administrative matters. The right hon. Member for Crosby (Sir G. Page), who is a former Chairman of the Committee, said:
You are not only taking on yourselves the power to legislate but you are taking on yourselves the power to dispense mercy and let a person off who has committed a criminal offence. Surely that cannot be right.
Mr. Robertson replied:
I would put it this way. It is a difficult point. The major purpose in these regulations is not to prosecute but to encourage and exhort and persuade compliance with the regulations.
It is surely a matter of concern that a Department can administratively dispense mercy and decide whether or not the aim of Parliament should be conformed with.
I also wish to enlarge on my right hon. Friend's cogent comments on the vires of the order, a matter of fundamental importance. In its 36th report the Joint Committee said:
The Committee note that a number of provisions of these regulations appear to relax earlier standards. Examples are: (a) that the period during which an employee is incapacitated and which determines whether his accident is notifiable is extended; (b) that the criteria for an employee's ability to return to work at his existing job appear to be weakened; (c) that the period of stoppage at a workplace as a result of explosion or fire which determines whether such a dangerous occurrence is notifiable is extended; and (d) that accidents arising from grinding wheels are no longer notifiable as such.
It went on:
The Committee have strong doubts about the vires of provisions which by relaxing current standards conflict with a principal purpose of the 1974 Act—contained in section 1 (2)—'to maintain or improve the standards of health, safety and welfare' established under other enactments.
My concern on health and safety matters has been demonstrated over a number of years. Like the Under-Secretary, I served on the Committee on the 1974 Bill. I wish to go beyond the views of the Joint Committee to outline my view of the situation.
Section 1 (2) of the 1974 Act refers to enactments being:
progressively replaced by a system of regulations and approved codes of practice operating in combination with the other provisions of this Part and designed to maintain or improve the standards of health, safety

and welfare established by or under those enactments.
That refers to the existing relevant statutes listed at the back of the legislation. That provision was specifically incorporated as a result of representations made in Committee and on Report. Indeed, the Under-Secretary supported such a view, because in Committee he said:
I think that there will be many opportunities in our discussions to point out the necessity for a more diligent approach to the investigation of factory accidents by the Factory Inspectorate and a much tougher approach to breaches of the law."—[Official Report, Standing Committee A, 2 May 1974; c. 60.]
The instrument that we are considering, which is signed by the Under-Secretary, is the reverse of the claim that he made so boldly in 1974. It reverses the posisition. At present, accidents have to be notified if a person is off work for three days or more due to an injury that prevents him from earning full wages at the work at which he was employed. The regulations allow a period of five days, because regulation 3 (1) (b) excludes the day of the accident and Sunday, or a rest day if Sunday is not a rest day.
Let us consider the case of a worker who strains his back. About 50,000 such cases are reported each year. At present, if the strain results in three days off work it represents a reportable accident. Under the regulations, an accident would be notifiable only after five days off work. The existing legislation requires that an employee must be able to return to his old job and earn a wage at it, but that is now discarded. The employer can give such a person a lighter job, with the result that the accident will not have to be notified. There will be no notification, no investigation, and no remedial action to prevent further back injury—the whole purpose of the factory inspection system, built up over the years.
Let us consider an accident that leads to the amputation of two or three fingers. Under existing legislation such an accident is notifiable if the worker has to take three days or more off work. Provided that the worker does not have to stay in hospital for more than 24 hours—if the stay is longer, for observation, that is excluded—amputation of the fingers is not a major injury under the regulations. Under regulation 2 a complete hand must


be amputated before it is regarded as a major injury.
If the employer gives the man a lighter job when he returns to work after four or five days, counting stock instead of doing his old job, that will not be regarded as a notifiable action, and perhaps a breach of the power press regulations would not come to light.
Schedule 1 sets out the dangerous occurrences that must be reported. The Factories Act 1961 provides that the bursting of a revolving vessel, wheel, grindstone or grinding wheel moved by mechanical power is a notifiable accident, but it is excluded from the regulations.
In 1979, 457 dangerous occurrences with 29 injuries took place. The reporting of such occurrences is to be removed. No investigations and no remedial action will take place. Dangerous occurrences will increase, as will the number of injuries. It can be argued that the reduction in the number of accidents arising from bursting grinding wheels is the result of legislation being applied tightly and scrutinised, and because it is a notifiable accident in its own right.
Schedule 1, in paragraph 4, extends the period of a reportable stoppage due to an explosion or fire from five to 24 hours. Clearly, the fire must be significantly more serious to be reportable under the order. The same is true of electrical fires. The period of stoppage is increased from five to 24 hours. The order extends the coverage that the Health and Safety at Work Act gave. That Act provides that regulations must be designed to maintain or improve safety standards. It does not suggest that if some standards are dropped because of a wider coverage, that will suffice on balance.
The longer notification period is not due to anxiety about standards. In evidence to the Committee it was made clear that it was because of administrative convenience. Mr. Stanley said:
The purpose of this is to fit in with the DHSS period for notification of industrial accidents and ties in with Regulation 7 which requires the DHSS to notify us of the accident when they receive the report of the accident from the employer.
It is not a question of higher standards or even the maintenance of existing standards. It is just a question of administrative convenience.
In order to avoid the uncomfortable thought that some of the specifics upon which the regulations are built encourage lower standards, Mr. Stanley said:
The answer is that you have got to look at the regulations as a whole rather than look at any specific point.
Primary legislation establishes a principle. Delegated legislation gives Ministers the power established in the detailed legislation. It is claimed that more accidents will be notified because of section 7 of the Act. That is doubtful. That section covers industrial injury benefit. A consultative document suggests that industrial injury benefit might be eroded or diminished. That would not be outside the Conservative Government's attitude. If that happens, the whole of section 7 will disappear as a side wind, and notification as a result of industrial injury benefit claims will disappear.
Reduction in the number of industrial injuries is vital. I am glad to see that the Secretary of State is present. He has been spending a great deal of time on a legislative matter that he thinks important, and to which I attribute a great deal less importance. That is the question of industrial relations. The records show that far more days are lost through industrial injury than through strike action. In 1976, according to figures provided by the Library, 23·2 million working days were lost due to industrial injury and 3·2 million days in strike action. In 1977, a worse year, 10·1 million days were lost in strike action and 23·2 million days were lost due to industrial injury. The lesson is clear. We should pay far more attention to losses of days through industrial injury than through strike action.
We are discussing regulations that demonstrate a lowering of standards established by the Health and Safety at Work etc. Act. I am driven to the conclusion that the regulations are designed to diminish reporting through the diminished effectiveness of the Health and Safety Executive and the Health and Safety Commission by virtue of the cuts in expenditure. The cuts are bound to have an effect on the number of factory inspectors who go round knocking on factory doors to investigate accidents and to see that the legislation is enforced. Those are the people who will be crucially affected by the cuts.
The regulations are a mistaken gesture. I hope that the Under-Secretary of State will recall his brave words in Committee, will withdraw the order, look at it again, and make sure that it is not ultra vires—as I and the Committee strongly believe it is—or we shall vote against it.

Mr. Tim Eggar (): I shall not detain hon. Members for long, but I want to draw attention to two matters that concern my local authority and, I believe, a number of other local authorities in London with which I have been in contact. I do so in the spirit of seeking clarification and confirmation rather than anything else.
The first matter relates to the load on the staff councils caused by the introduction of these provisions. My council at Enfield is deeply concerned that it will find a substantial increase in its work load. At present 28,000 people are employed in non-council work in the London borough of Enfield. An average of 67 accidents is notified every year. I agree that the figure is probably evidence of the failure of the present notification system. Nevertheless, if there is to be a significant increase in the number of accidents notified to the local authority there will inevitably be staffing implications, at a time when the Government, rightly, are putting pressure on local authorities to reduce manning levels.
The second matter relates to the council not as an enforcing authority but as an employer. It has duties beyond those of other employers relating to people who use public places such as libraries and toilets. The council is concerned about accidents that occur in connection with the home help service. I am not clear, from a review of the statutory instrument, whether the Under-Secretary of State has taken into account the points made to him by local authorities. Nevertheless, I would like my hon. and learned Friend to put that clearly on the record.
I received a letter from the chief executive of the London borough of Enfield which states:
Moreover, an exploding coffee percolator, or an electrical appliance catching fire in the course of a home help's work would be a dangerous occurrence which we would have to notify even if nobody was injured.

That aspect is covered by schedule 3, dealing with dangerous occurrences. It seems, however, that this matter has been excluded from schedule 1 (1). I should like clarification of that.
The chief executive goes on:
I must say, that I remain worried about the application of the proposals to the home help service in particular. We have no control over people's household arrangements and equipment. An accident occurring after the home help has left (say an old lady slipping on a floor which the home help had polished) would be almost impossible to investigate properly if and when it even came to our knowledge.
Clearly, if there is some misunderstanding on the part of the London borough of Enfield and other local authorities that matter should be clarified, because there is considerable concern about it.

Mr. Greville Janner (): Surely the object of these regulations is to ensure that notification takes place so that accidents may be monitored and steps taken to avoid any recurrence. I do not know why the hon. Member for Enfield, North (Mr. Eggar) is so worried about local authorities having to accept notifications. Surely they should be more rather than less concerned, whether it is about the explosion of a coffee percolator or an old lady slipping on a floor polished by a home help. The trouble in practice is that there are too few notifications, not too many.
Too often people do not notify every notifiable accident, particularly on building sites and in engineering works.
Secondly, there are other accidents at work that are not identified as such—accidents causing back injuries, for example, which do not hit people at the time and which do not keep them off work for three days.
Hundreds of thousands of people are suffering from nervous stress ailments, probably caused at work, but they cannot isolate them as being work accidents because they may just as easily have resulted from something that happened at home, or from a combination of the two. There are accidents to people's hands and feet that may be comparatively minor but may lead to major consequences and that are not notifiable.
I was recently told of the case of someone who cut his finger on the metal banding on a bale. The cut became


infected and in due course the hand became gangrenous and was amputated. Unfortunately, that is not untypical. Minor accidents turn into major disasters. I would have thought that the Government would wish to ensure that there was the maximum clear and effective notification. On this issue, unlike others that we discussed last night, I should have thought that we were all on the same side, all attempting to achieve a better system for the notification of accidents. We are surely attempting here to improve the system, not to maintain and certainly not to reduce the amount of notification.
Let me give one more example. My hon. Friend the Member for Keighley (Mr. Cryer), in an excellent and well argued speech, referred to the cutting off of a finger. There is also the cutting off of toes. It is to avoid such accidents that protective gloves or boots and shoes have to be provided. One of the major arguments going on right the way through our industry is whether boots should be provided; if so, whether they should be provided free; whether they should be subsidised, and, if so, on what basis; whether a subsidy helps; and how, in practice, we can encourage employers to spend a little more on the protection of their employees. We cannot do that unless we have proper statistics, which tell the truth, which are maximal and not minimal, and which are accurate.
A substantial number of good employers keep a record not only of notifiable accidents but of every accident, however small. Certainly those of us who advise in industry say that the accident book should contain these records. If the records are properly kept, and if they are as clear as they should be, they are available. The notification procedure should not be a burden on industry, the local authority, or those who receive it.
I ask the Minister to reconsider these regulations and see whether the points that have been made to him are right. They are not made in any spirit of antagonism or any wish to make matters worse. We may attack on other occasions to destroy policies. We are trying, together, to achieve enforcement of an all-party statute for which even the Irish voted. We are trying to achieve a reduction, in real terms, in accidents to those

who are fortunate enough still to be in work
The Act has been doing excellently because the commission and others have been co-operating with it, because the unions have been working with it, and because the safety representative system has been built up. Now these notification rules appear, in the ways that have been outlined, to reduce the requirements for notification. Instead of three days, when a person is unable to do his normal job, it is now essentially four days—because the day of the accident is excluded—and possibly five days.
Will the Minister say whether he agrees with that definition? If he does, what is the point of it? Does he agree that, in effect, there will be fewer accidents to notify? If that is right, does not he agree, with those of us who have considered this matter, that this is a reduction in the notification requirement? By definition, it is not a maintenance of the standards required by the Act but a lowering of those standards. If it is a lowering of the standards required by the Act it must be ultra vires the schedule that gives power under the Act to make the regulations.
Those matters are worrying us. We want to achieve better regulations. We are worried in case this statutory instrument makes matters worse instead of better and accidents less notifiable and, therefore, more likely.

Mr. Ronald W. Brown (): I echo the call of my hon. Friend for what we believe to be unity in this matter. We are all seeking to do the same thing. The accident record in our country is deplorable. Basically, we do not know what the real size of it is. We know that it is deplorable, and what we believe is taking place is even worse. Therefore I support my hon. Friend's view that we should make it the objective of everybody to try to avoid accidents and, when they happen, to seek methods of ensuring that they do not occur again.
I was sad when I read the regulations. Certainly those of us who have been participants in safety work in industry over the years have tried desperately to encourage employers and employees to seek


safer methods of working. As I read the regulations it seems to me that they go the opposite way. They appear to dissuade people from being interested. I saw the commentary on the evidence that was taken in the Joint Committee. I regret that it has only just become available. I understand the printing problem. However, it is impossible for hon. Members to undertake their task properly. I received a regulation that had no relevance to the examination until I picked up the document this evening just before I entered the Chamber.
Mr. Thornton gave evidence on behalf of the Department, and I thought that his comment was very real. He said:
So if we have a fracture of a bone in ankle or foot and it is not serious enough to keep a person in hospital for 24 hours we do not want to know about it but if it is we do.
Did it not occur to Mr. Thornton that the fact that someone had an injury that did not keep him in hospital for more than 24 hours was a stroke of good fortune? That person might have lost his foot, but Mr. Thornton takes the view that he does not want to know about the accident—even though the accident that caused the damage may be potentially extremely dangerous—because of a stroke of good fortune.
It was that sort of attitude, which was prevalent among those giving evidence to the Joint Committee, that worried me. Mr. Stanley was question by my hon. Friend the Member for Keighley (Mr. Cryer). He said:
The purpose of this is to fit in with the DHSS period for notification of industrial accidents and ties in with Regulation 7 which requires the DHSS to notify us of the accident when they receive the report of the accident from the employer.
That should read "if they receive a report". There is no obligation on the employer to submit a report. Who is to say that the employer gives a true version if he submits a report? The Department and the Health and Safety Executive should want to know, so that they can carry out proper investigations. That can be done only if it is mandatory upon the employer to provide the information.
If there is no mandatory obligation upon the employer, two things are possible. If the employer feels that he is culpable, what is the incentive for him to

make a report? An accident has a great spin-off. Many things flow from it. If an employer wants a quiet life he will not submit a report unless he is obliged to do so.
The Under-Secretary of State must satisfy the House that regulation 7 will ensure that employers are obligated to report an accident. If not, the House will want to know why not. How can it be said that there is any sense of support for the campaign to reduce accidents if the employer is being encouraged to beleve that he does not have to submit a report? If we provide the employer with all the escape routes and allow him to interpret or misinterpret the regulations as he thinks fit, we are giving him complete freedom.
Mr. Robertson told the joint commitee:
We as a Department would not suggest that these regulations are perfection or anything like that".
He argued that they are likely to ensure that there is an increase in reporting as against what he thought was underreporting now. He said that the regulations
represent a substantial improvement in safety standards.
There is not a shred of evidence for that. I ask the Under-Secretary of State to substantiate that view. Where is the evidence that they will be an incentive for safe working?
I have asked the Department why some inspectors seem to spend a great deal of time in factories that are excellent in all their safety work. It seems that there is a golden rule that allows inspectors to keep returning to the same firm if it is trying to improve its safety standards. However, in Hackney Road, in Hackney and Shore-ditch, all the scrimshankers are setting up in the furniture business and there is not a shred of safety in sight. I have asked the Department when the inspectors last visited those establishments. I have been told that there are problems—that there are not enough inspectors, and that the present inspectors are likely to get to these places only once in five or seven years.
In a good firm, a firm that is spending vast amounts of money on safety, the factory inspector is there as frequently as he can get there. No doubt the coffee


is good. The scrimshankers will find these regulations of great value, because they will give them an out.
We are not arguing that there should be no revision. Of course there must be a revision in the light of information received and in the light of what is happening. I am not against that if we have safety at such a pitch that we can now say "Let us ease off a bit, we are now improving greatly". If accidents are reducing, there may be some argument for seeing whether we should be as tough as we might be.
All the evidence is to the contrary. There is a continuing run of accidents. We are not winning this battle. The furniture industry is a classic example. As parliamentary adviser to the unions, I can tell the Minister that we are losing the battle rather than winning it. Therefore, any action that his Department takes that will make that battle harder is a mistake. Even though the Minister may advance other aesthetic arguments for saying "Let us be more voluntary, and easier" unless he can show that this will have a greater impact on the number of appalling accidents in this country he cannot be justified in bringing forward these regulations.
When a Joint Committee of Parliament is prepared to draw a serious conclusion about these regulations—as it has done in its thirty-sixth report—any departmental Minister should take care if he intends to override those views. If the Minister is unwise enough to proceed with these regulations he had better spend the rest of the time left in this debate identifying in close detail exactly why he believes that the Joint Committee, with all its experience, is wrong, and why he, who has been in office only 15 months, believes that his knowledge is supreme.

The Under-Secretary of State for Employment (Mr. Patrick Mayhew): I begin by thanking the right hon. Member for Doncaster (Mr. Walker) for the tribute that he paid to the Health and Safety Commission for the work that it does. As the House knows, the commission is charged under the Health and Safety at Work etc. Act—an all-party measure passed in 1974—with the responsibility of administering the legislation that governs the health and safety of people at work as well as members of the general

public who are affected by activities at work.
It should not be readily supposed that the commission, with its record over the last few years, would wish to introduce new regulations for the approval of Parliament that would have the foreseeable effect of diminishing the safeguards that existing legislation offers to those whose safety it is the responsibility of the commission to safeguard.
The right hon. Gentleman welcomed the wider scope of the notifications of accidents for which these regulations provide. At the outset, I want to say that it is the intention of the commission, in putting these regulations forward, not to diminish but to improve the means by which the safety of people at work may be safeguarded. It does so in this way because it is virtually common ground—and certainly the belief of the commission—that there is substantial failure on the part of employers to report accidents that are notifiable under the present legislation. Although these regulations are drafted and put forward on behalf of the commission, it is our view that it is in the interests of safety that reportable accidents should be reported and that these regulations will secure a significant improvement in the extent of reporting.
The hon. Member for Keighley (Mr. Cryer) and I served on the Health and Safety at Work Committee in our first year in Parliament. I know of his interest in these matters and he knows that before I came to the House I had extensive experience of industrial injuries. I hope that he will accept that I share the views of many hon. Members about the great importance of reducing the incidence of industrial injuries, and that that view is common to all members of the Government.
The hon. Member for Keighley allowed himself to speculate whether these regulations had been introduced by the Health and Safety Commission as a means of trimming its sails to the wind of financial stringency. If he had read the consultative document he would have seen that the commission first consulted on the draft regulations along these lines in 1975. He may conclude that there is a certain embarrassment in that argument if he believes it to hold any water. There has been substantial consultation. Indeed,


three separate consultative documents have been published by the commission.
I should also like to correct the right hon. Member for Doncaster, who said that the Health and Safety Commission had already been made to take a 10 per cent. cut. That is quite untrue. On 6 December the executive was committed to a reduction of 6 per cent. on staff-related expenditure, compared with an average of about 11 per cent. for the Department of Employment group as a whole. Thereafter, it was exempted from the further 2½ per cent. reduction that was imposed by way of salary cash limit squeeze for 1980 and 1981. The commission has recently been invited by my right hon. Friend to consider the likely effects of an 8 per cent. cut, if that were found to be necessary. No decisions on that have been made. It is important to put that correction on the record.

Mr. John Grant (): When the Under-Secretary says that the Health and Safety Commission has not been asked to take a 10 per cent. cut, is he talking about cash or about staff numbers? My understanding is that the consequence of the cuts will be a cut of more than 10 per cent. in staff numbers.

Mr. Mayhew: The cut of 6 per cent. to which I referred was in respect of staff-related expenditure. The assessment of the Health and Safety Commission was that that would require a staff reduction of 260. The commission subsequently decided that although savings of that order would not be achieved without some difficulty, their impact on the effectiveness of inspectorates would be minimised by improving the efficiency of the support services. The consequence of that will be proportionately greater savings in support staff and an increase in the total staff savings, to 350.

Mr. Harold Walker: Will the Under-Secretary explain—

Mr. Mayhew: If it is said that that is a cut of 10 per cent., it results from the commission's decision. The commission was required to make a reduction of 6 per cent. on staff-related expenditure. It decided that it would most effectively achieve that by improving the efficiency of the support services and by other

economies. The consequence of that will be proportionately greater savings in support staff.

Mr. Walker: It is important to get this matter clear. I have a copy of the letter sent to the Secretary of State by the chairman of the commission, dated 3 July. It was not sent to me by the chairman and I am not prepared to say by what means I obtained it, but I know that it is authentic. Otherwise, I should not present it to the House. It states:
Dear Secretary of State,
Health and Safety Commission: future budget and programme of work.
On 21 May I submitted to you the Commission's proposed programme of work for 1982/3 on the basis of the budget for staff expenditure which you had told us you would make available to us in that year. This involved a cut of about 10 per cent. in the staff employed by the Health and Safety Executive in the autumn of 1979.
You subsequently wrote to me saying that in the light of the Government's general policy of reducing the size of the Civil Service to 630,000 by 1983/84, you wished to consider the implications of an additional 8 per cent. cut in HSE staff by that year.
I hope that the House will accept that I gave the figures in good faith, based on that letter sent from the chairman of the commission to the Secretary of State. If 10 per cent. plus 8 per cent. does not add up to 18 per cent., it is time that I stopped coming to the House.

Mr. Mayhew: I stand by what I said. The cut amounted to a 6 per cent. cut in staff-related expenditure. As I have to finish by 11.30 pm I must get on with the purpose of the regulations.
The first point with which I want to deal concerns the vires. For many years, as the House knows, safety legislation passed by Parliament has required, in one form or another, the notification to various authorities of accidents and dangerous occurrences. The primary purpose of these requirements has been to assist in the prevention of future accidents by enabling the authorities to investigate promptly the causes of accidents and dangerous occurrences should they wish to do so; to measure safety performances and changes in accident patterns so that appropriate measures can be taken; and to meet demands for statistical and related information from the Government, Parliament, industry and other bodies. That is and has been


the purpose of notification since notification was first required many years ago.
Since 1974 the principal responsibility for such matters has rested with the Health and Safety Commission and the executive, but under existing legislation, although accidents to employees and dangerous occurrences are notified to different inspectorates associated with the Health and Safety Executive and to local authorities, the legal requirement to notify accidents is not uniform over the whole area of work activity.
Briefly, the present requirements for reporting are as follows: in factories, accidents causing loss of life or which disable a person for more than three days from earning full wages at the work at which he was employed; and in mines and quarries, accidents causing death or serious bodily injury. In agriculture there are no requirements, except for poisonous substances as the causes of accidents.
The 1974 Act bought 8 million people within the ambit of the Health and Safety Executive. They include those working in schools, hospitals, fairgrounds and places of entertainment, and in respect of them there are no requirements for the reporting of accidents. As a result, there is an almost complete lack of accident experience in these areas.
In addition, the commission has identified two major disadvantages that derive from the present system. When an accident occurs to an employee in a factory or office, his employer is required to provide information about the same circumstances on two different forms; one to the DHSS and the other to Her Majesty's Factory Inspectorate. Significantly, it has been known for some time that it is quite common for accidents not to be reported although they are required by statute to be reported.
Failure to report appears to be most prevalent in the case of factory accidents. From a number of surveys, it seems likely that the extent of failure to report is about 30 per cent. That is a serious shortcoming. Accordingly, early in 1975 the Health and Safety Commission directed the Health and Safety Executive to prepare proposals for regulations for the notification of accidents and dangerous occurrences arising from work activities.
In July 1975 a consultation document was published. As a result of the comments received, the draft regulations were significantly revised and a further document was published in July 1977. A final consultative document, including draft regulations, was published in March 1979. As a result of these repeated consultations, the present proposals reflect agreement with all sides of industry, including the TUC. During this period, close consultation has been maintained with the principal Departments, and they are in broad agreement. The final draft was circulated to all Departments in December 1979.
The proposals are not a flash in the pan—as the hon. Member for Keighley suggested—which seek to mitigate the onslaught of some harsh new Conservative Government. They are the product of several years of consultation and have the general agreement of all sides of industry. They seek to ensure that accidents involving fatal and major injuries, and dangerous occurrences with the potential for inflicting major injuries, are reported promptly and directly to the enforcing authority. Secondly, they seek to ensure that information about more minor accidents is obtained as efficiently and at as low a cost as possible by using current DHSS procedures. Thirdly, they ensure that accident details are recorded by each employer, both for their own preventive programmes and so that they can be available for inspection by safety representatives and enforcing authorities.
The regulations will apply uniformly across all work activities. The details of the requirements to report will be the same wherever the incident occurs, instead of the wide variety of requirements that are now embodied in the law. It is also intended that the present considerable number of direct reporting forms will be replaced by a single form.
An important effect of the new regulations is that they will extend accident reporting requirements to areas of employment that have not previously been covered. This includes those areas covered by the Health and Safety at Work etc. Act 1974 for the first time.
Perhaps the most important innovation is that the requirement to report accidents direct to the enforcing authority will be


restricted to fatalities, major injury accidents and dangerous occurrences. That aspect of the regulations will mean that there will be a drastic reduction in the administrative burden imposed by dual reporting, as it is estimated that only about 5 per cent. of notifiable accidents will be directly reportable. There will be a consequent saving in cost to those whose duty it is to report.
As for the remainder of accidents in respect of which claims for industrial injury benefit are made, the DHSS will have to send a copy of the report form BI 76, upon which information about the accident is set out. The right hon. Gentleman said that it was impossible to see what the form said. A copy of the form is included in page 19 of the consultative document. The form requires an employer to set out whether the claimant was employed in the occupation; the date of the accident; between what hours the accident took place; and whether—as a result of his investigation—the employer is satisfied that an accident occured, the nature of the accident, and how it happened. It also states:
If a fall of person plant or material, state the height of the fall.
The employer is required, and has a full opportunity, to set out the results of his investigation into the accident.

Mr. Cryer: The Minister has demonstrated that there is a difference between a consultative document and regulations. I never suggested that these regulations were a flash in the pan. That form, included in the consultative document from which he quotes, is not included in the instrument. The Minister must know that the regulations give power to the Department to produce what form it likes. Why does he not withdraw the regulations, and, since he quotes from the form in the consultative document, produce new regulations, with the form as a schedule? It would be clearer.

Mr. Mayhew: The form in question is the form that the DHSS has to send to any employer of a person who has made a claim for industrial injury benefit as a result of an accident sustained at work. The scheme on the regulations for minor injuries is that the employer shall fill in, in the ordinary course of his requirements under the DHSS legislation, his account

of the accident on that form and that thereafter the Secretary of State for Social Services shall send to the Health and Safety Commission a copy of that form. By this means it is estimated that 30 per cent. of accidents that are at present not notified under the current legislation will be notified. That is an important matter, and one greatly in the interests of safeguarding the safety, health and welfare of people at work.
The second point is that one of the recommendations of the Robens Committee, which was the origin of the Health and Safety at Work etc. Act, will be met. At paragraph 412 Robens recommended that:
Priority should be given to the task of devising a standard form of accident report suitable for the purposes of both the Department of Health and Social Security and the proposed Authority for Safety and Health at Work, so that employers would need to report an accident only once".
To benefit from the more detailed and comprehensive information provided by the DHSS system the definition of a three-day plus accident is slightly different from that in the existing legislation—section 80 of the Factories Act—to which reference has been made. Under the new regulations the day of the accident is not taken into account. The number of accidents that will cease to be reportable by reason of that is so small—estimated at less than 1 per cent. of those at present reported—as to be of little practical importance. This will be more than offset by the 85 per cent. increase that it is estimated will result from the wider scope and efficacy of the new regulations.

Mr. Harold Walker: Can the hon. and learned Member answer the point about the notification depending upon the claim for benefit being made and how this is reconciled with the Green Paper proposals?

Mr. Mayhew: Certainly, I shall deal with that point.
It is quite right that the case of a minor accident, as defined, there is no statutory obligation upon the employer to notify. In the case of any minor injury—and they will include the vast majority—that is the subject of a claim for industrial injury benefit, the notification takes place automatically, because the DHSS sends form BI 76 to the employer, who fills in his account of the


accident. By statute, the Secretary of State for Social Services is obliged to send a copy to the enforcing authority. By that means a large number of additional accidents will be notified.
The right hon. Member for Doncaster asked whether the Government were proposing to make industrial injury benefit for the first eight weeks the responsibility of the employer, as well as sickness benefit. No decision on either one or the other has been taken. The Government are determined that there shall be as effective a means as possible of notifying accidents, and if it be the case that amendments should at a later stage be needed, the Health and Safety Commission will, without any doubt, be anxious

Division No. 434]
AYES
 [11.30 pm


Alton, David
Ellis, Tom (Wrexham)
Roberts, Ernest (Hackney North)


Atkinson, Norman (H gey, Tott'ham)
Evans, John (Newton)
Rooker, J. W.


Beith, A. J.
Ford, Ben
Ross, Stephen (Isle of Wight)


Bennett, Andrew (Stockport N)
Grant, John (Islington C)
Rowlands, Ted


Booth, Rt Hon Albert
Hamilton, James (Bothwell)
Skinner, Dennis


Brown, Ronald W. (Hackney S)
Hamilton, W. W. (Central Fife)
Snape, Peter


Callaghan, Jim (Middleton & P)
Hardy, Peter
Soley, Clive


Campbell-Savours, Dale
Harrison, Rt Hon Waiter
Spearing, Nigel


Cocks, Rt Hon Michael (Bristol S)
Haynes, Frank
Steel, Rt Hon David


Coleman, Donald
Hooley, Frank
Stewart, Rt Hon Donald (W Isles)


Concannon, Rt Hon J. D.
Janner, Hon Greville
Tinn, James


Craigen, J. M. (Glasgow, Maryhill)
Johnston, Russell (Inverness)
Varley, Rt Hon Eric G.


Cryer, Bob
McCartney, Hugh
Wainwright, Edwin (Dearne Valley)


Cunliffe, Lawrence
McElhone, Frank
Walker, Rt Hon Harold (Doncaster)


Dalyell, Tarn
McKay, Allen (Penistone)
Welsh, Michael


Deakins, Eric
McQuade, John
Wigley, Dafydd


Dean, Joseph (Leeds West)
Marks, Kenneth
Woodall, Alec


Dixon, Donald
Millan, Rt. Hon Bruce
Young, David (Bolton East)


Dormand, Jack
Paisley, Rev Ian



Douglas-Mann, Bruce
Parry, Robert
TELLERS FOR THE AYES


Duffy, A. E. P.
Penhligon, David
Mr. Terry Davis and


Dunn, James A. (Liverpool, Kirkdale)
Powell, Raymond (Ogmore)
Mr. George Morton


Eastham, Ken
Prescott, John

NOES


Adley, Robert
Garel-Jones, Tristan
Mellor, David


Alexander, Richard
Griffiths, Peter (Portsmouth N)
Miller, Hal (Bromsgrove & Redditch)


Alison, Michael
Hampson, Dr Keith
Mills, Iain (Meriden)


Atkins, Rt Hon H. (Spelthorne)
Hawkins, Paul
Mitchell, David (Basingstoke)


Baker, Nicholas (North Dorset)
Hawksley, Warren
Moate, Roger


Beaumont-Dark, Anthony
Heddle, John
Morrison, Hon Charles (Devizes)


Berry, Hon Anthony
Hogg, Hon Douglas (Grantham)
Mudd, David


Blackburn, John
Hooson, Tom
Neale, Gerrard


Boscawen, Hon Robert
Howell, Ralph (North Norfolk)
Nelson, Anthony


Boyson, Dr Rhodes
Hunt, John (Ravensbourne)
Newton, Tony


Bright, Graham
Hurd, Hon Douglas
Normanton, Tom


Brinton, Tim
Jopling, Rt Hon Michael
Onslow, Cranley


Brown, Michael (Brigg & Sc'thorpe)
Kellett-Bowman, Mrs Elaine
Page, John (Harrow, West)


Bruce-Gardyne, John
Kershaw, Anthony
Page, Rt Hon Sir Graham (Crosby)


Buck, Antony
Le Marchant, Spencer
Page, Richard (SW Hertfordshire)


Cadbury, Jocelyn
Lester, Jim (Beeston)
Prentice, Rt Hon Reg


Carlisle, John (Luton West)
Lloyd, Peter (Fareham)
Price, David (Eastleigh)


Carlisle, Kenneth (Lincoln)
Loveridge, John
Proctor, K. Harvey


Chapman, Sydney
Lyell, Nicholas
Rathbone, Tim


Clark, Sir William (Croydon South)
Macfarlane, Nell
Ronton, Tim


Clarke, Kenneth (Rushcliffe)
MacGregor, John
Sainsbury, Hon Timothy


Colvin, Michael
McNair-Wilson, Michael (Newbury)
Shaw, Giles (Pudsey)


Cope, John
McNair-Wilson, Patrick (New Forest)
Shepherd, Colin (Hereford)


Dean, Paul (North Somerset)
Major, John
Skeet, T. H. H.


Dorrell, Stephen
Marlow, Tony
Speed, Keith


Dover, Denshore
Mates, Michael
Speller, Tony


Dykes, Hugh
Mather, Carol
Spicer, Jim (West Dorset)


Eyre, Reginald
Maxwell-Hyslop, Robin
Spicer, Michael (S Worcestershire)


Fenner, Mrs Peggy
Mayhew, Patrick
Stainton, Keith

to make whatever amendments are necessary.
I am satisfied, and the Government are advised, that the regulations are intra vires. I believe that there is no ground whatsoever for doubting the judgment and wisdom of the Health and Safety Commission in bringing forward the regulations as representing an improvement in the safeguarding of those at work, for whom it is responsible.
I commend the regulations to the House, and ask that the prayer be rejected.

Question put:—

The House divided: Ayes 64, Noes 105.

Stanbrook, Ivor
Wakeham, John
Winterton, Nicholas


Stevens, Martin
Walker, Bill (Perth & E Perthshire)
Wolfson, Mark


Strading Thomas, J.
Waller, Gary
Young, Sir George (Acton)


Taylor, Teddy (Southend East)
Warren, Kenneth



Tebbit, Norman
Watson, John
TELLERS FOR THE NOES:


Thompson, Donald
Wheeler, John
Mr. Peter Brooke and


Thorne, Neil (Ilford South)
Wickenden, Keith
Lord James Douglas-Hamilton


Waddington, David

Question accordingly negatived.

INDUSTRIAL TRIBUNALS

Mr. Harold Walker (): I beg to move,
That an humble Address be presented to Her Majesty, praying that the Industrial Tribunals (Rules of Procedure) Regulations 1980 (S.I., 1980, No. 884), dated 26 June 1980, a copy of which was laid before this House on 8 July, be annulled.

Mr. John Grant (): To judge from these latest regulations it may be thought that Britain's employers are having a hard time getting justice at industrial tribunals when workers complain that they have been unfairly dismissed or make other applications to have grievances dealt with. That would be the most logical explanation of the Government's persistence in seeking to change the law to tilt the balance in favour of employers. It is a persistence that has resulted in a third set of proposals within a year.
The latest package has been dumped on us, despite the lack of worthwhile evidence that these and other new provisions are necessary or desirable. The reports on industrial tribunals have entailed a curious piecemeal progress, but the overall intention is clear. It is to make hard-pressed employers feel better and give an inexpensive sop to the smaller firms, which have suffered most from high interest rates and recession and have no reason now to justify the support that most of them gave the Conservative Party.
To sketch in the backgrounds to these regulations, the Government began their assault on workers' rights last summer, in another of these largely unpublicised parliamentary late-night exercises, similar to this one. An order was secured increasing from 26 to 52 weeks the qualifying period before unfair dismissal could be claimed. That change took effect on 1 October 1979, along with another change,

which weakened protection against redundancy. Then came the measures in the Employment Bill. Small firms will receive special exemptions from unfair dismissal procedures, the onus of proof on employers to show that dismissal is reasonable will be removed and alterations will be made relating to dismissal because of union membership agreements and to the way in which awards are made by tribunals, so that that much less compensation for sacked workers is likely.
The Government argue that they seek to reduce the burden of job protection laws on employers and particularly on small firms. They contend that those laws are a deterrent to the employment of more people. Ministers accept that it is undesirable to create a second tier of employees with less protection, and then go on to do just that.
Independent research, including research commissioned by the Department of Employment, is overwhelmingly against the Government in these matters, but all that is brushed aside, along with our votes and concern. The Employment Bill has now completed its final parliamentary lap before it receives Royal Assent.
However, after all that, the Government still are not satisfied. They have to tamper yet again, and so we have these further proposals. I have to admit that they have the merit of consistency. In Opposition the Secretary of State for Employment and his hon. Friends were constantly carping about the operation of the tribunals and the fact that they failed to make their case stick then has not deterred them in Government.
The work load of tribunals has risen appreciably over the years. The biggest single factor was the Labour Government's Employment Protection Act, which introduced a range of new rights for individual workers, many of which have already been seriously undermined by the present Government. Indeed, many workers have lost their rights entirely in some areas.
The new rights led to a considerable increase in tribunal cases. That was inevitable as workers claimed their rights under the Employment Protection Act and other legislation. One of the most cynical and hypocritical of the Government's suggestions is the claim that they constantly make that employment is being hindered by the operation of those workers' rights—at a time when hundreds of thousands are being thrown on to the industrial scrap-heap as a direct result of Government policies. Suggesting that the changes that we are discussing will make a jot or tittle of difference to job creation or protection would be an insult to the intelligence of hon. Members and an even more wounding insult to those who are unemployed through no fault of their own. We shall have to wait to find out whether the Under-Secretary uses that argument, but it has certainly been a constant theme of Ministers in recent months.
Four or five main changes are proposed in the regulations. The tribunals will be able to hold pre-hearing assessments, at which they will be able to warn an applicant that they think that he or she has no reasonable prospect of success and that if the worker insists on a full hearing it is likely to involve costs. That will worry many employees who believe that they have legitimate grievances. It seems to be deliberately aimed at discouraging applicants from pressing their cases.
I am aware that the change can apply to either party, but there is not much doubt that it is aimed primarily at applicants, to try to get them to withdraw claims or to accept what an employer might offer for a quick settlement. There is no worthwhile evidence or research finding to suggest that many unmerited cases reach the tribunals. The best survey is probably the industrial relations research survey of 1979, to which we referred a great deal in debates on the Employment Bill. That made it clear that few industrial tribunal applicants were out to pursue claims for what was called nuisance payments.
The odd industrial "nut case"—a person with a deep-seated and unjustified sense of grievance, an eccentric, or someone who is determinedly malicious—is the least likely type to be deterred from seeing it through to the bitter end. The

House should also remember that there is a sifting-out process at the conciliation stage. About two-thirds of all unfair dismissal cases in 1978 ended in settlements outside the industrial tribunals.

Mr. David Mellor (): The hon. Gentleman is having to struggle to work up synthetic hysteria against the change. Is he saying that it is a vicious attempt to deter people from coming to tribunals or is he claiming, as he appeared to be in his last few sentences, that it will not make any difference anyway? What detriment could there be to employers or to applicants if the applications that are genuinely frivolous, whether many or few, are weeded out by a warning at an early stage?

Mr. Grant: If the hon. Gentleman will allow me to develop my argument he will discover that it goes well beyond frivolous applications.
During 1979 the Leeds regional office of industrial tribunals carried out a prehearing assessment experiment, which was monitored by ACAS. The results showed conclusively that pre-hearing assessments did not sift out many claims, and the experiment was stopped. It is right to point out, however, that during the experiment industrial tribunals had no power to warn applicants about costs when they persisted in pressing cases. That is likely to be the biggest deterrent factor and the most intimidatory one.
While the time and money of the parties could be saved when a case is got out of the way at a pre-hearing assessment, when it does not come off and a case goes ahead the whole procedure will be lengthened, which will involve more time and money. A pre-hearing assessment at which the applicant wished to call witnesses or be represented could become more like a full hearing. That would add to the time and expense.
An important change widens the existing rule on costs so that they can be awarded against parties who bring or conduct cases unreasonably. A further deterrent to the employee is involved. Employers are likely to allege unreasonableness, and conciliation officers will warn applicants about that. "Unreasonableness" goes further than "frivolous or vexatious


behaviour". I understand the proposition that frivolous or vexatious behaviour includes the notion of unreasonableness, but a person can be unreasonable without being frivolous or vexatious. There is no Government guidance on what constitutes unreasonable behaviour. The Government seem to believe that the change will encourage uniformity by the tribunals. Nothing that I have heard leads me to alter my view that it is more likely to produce more doubt and uncertainty. It could also lead to a greater use of lawyers, especially by employers. The Government say that they wish to avoid that, but each time they tamper with legislation they produce more work for the lawyers.
I turn to the change involving the discovery of documents before tribunal hearings. An employer can demand more information from applicants even before he has set out the case. The applicant can apply to have the employer's application set aside. The red tape involved could lead to delays and even evasion. The Government regard that change as technical. If that is so I hope that the provision will be monitored. There is room to doubt whether the change is for the better.
Industrial tribunals are to be allowed to adopt less formal procedures and rules of evidence. They can cut out the right of the parties to make long-winded opening speeches. We can agree about the desirability of that, but I fear that some of the other changes made under the regulations will detract from the value of that change and add to the length and legalism of the tribunals.
If regulation 14, on joinder, is used much the industrial tribunals might have to assess whether industrial action is justified. An unfair dismissal case about union membership might be heard. If a strike is called the union may be joined as a party to the proceedings. That may call for difficult judgments from a tribunal, especially when assessing compensation. Trade union members of tribunals may be faced with special difficulties. I hope that the Government have given thought to that. It is another undesirable consequence of the Employment Bill. Dangerous and uncharted waters are being navigated.
The Government claim that the changes will not discourage genuine applications to tribunals. Whatever is said about the changes, the overall motives are suspect and objectionable. The regulations are part of the pattern of tilting the balance from employee to employer. When the Government have the right audience they are happy to boast about that.
I want to refer briefly to some relevant statistics. In 1978, the last full year for which figures have been published, more than 65 per cent. of unfair dismissal cases were resolved without a tribunal hearing. Conciliation procedure accounted for agreed settlements in 35 per cent. of cases, and 30 per cent. were withdrawn. Of the remainder that reached tribunal hearings, 72·3 per cent. were dismissed, while 27·7 per cent. were upheld. Where compensatory awards were made, the median was only £375, even though the maximum possible was £5,200. It is hard to square those statistics with employer anxiety. It is the unions that might be expected to jib at the lack of success of their members at tribunals.
The Trades Union Congress is deeply concerned about the new regulations. Only the move towards less formal and legalistic tribunal procedures receives any union welcome. For the rest, my remarks reflect broadly the TUC view, shared by the Opposition and myself. The hon. and learned Gentleman will, I am sure, recall saying:
The Government regard the concept of unfair dismissal as important and are as much behind in it 1980 as their Conservative predecessors were in 1971 when they introduced it.'
These regulations are particularly concerned with unfair dismissal. That is an issue that the tribunals spend so much of their time dealing with. Ministers tend to stick to the line that whatever the clash about facts, employers think that they are hard done by, so that the psychological impact of changes such as those before the House will be significant. I have to tell the Government that the psychological impact on unions and the sacked workers whom they represent may also be significant Far from underpinning the industrial peacemaking machinery with these and other changes that the Government insist on making, the Government are likely to undermine confidence in the industrial tribunals system. If that proves


to be so, there will be a tendency to look for more direct and damaging ways of redressing grievances.
The number of strikes arising from dismissal and disciplinary matters has fallen steadily. They accounted for 7·3 per cent. of all workers directly involved in stoppages in 1973, and by 1979 that figure had dropped to 2·9 per cent. There can be no doubt that ready access to the tribunals has played a valuable part in achieving this improvement. The action that the Government are taking tonight, together with other actions taken in this area, must put that progress at risk. If the Government interfere with the tribunals in a way that jeopardises their excellent work, the responsibility for the outcome will be entirely theirs.

Mr. David Mellor (): It may be the duty of an Opposition to oppose, but I do not think that tonight the Opposition have added much to their credibility in the House or outside by opposing these regulations. I cannot think that they add to their credibility by opposing the regulations with the exaggerated language of the class war set out by the hon. Member for Islington, Central (Mr. Grant). I would have been considerably more impressed by his speech on what is a fairly technical matter of tribunal procedure if I had felt that underlying it there was any clear evidence that the hon. Gentleman had spent any time at industrial tribunals, rather than picking up his brief from the TUC and parroting it off.

Mr. John Grant: The difference between us is that I am not paid as a lawyer to attend industrial tribunals. I earn my money by being a Member of Parliament in the House of Commons.

Mr. Mellor: I would not care to inquire how the hon. Gentleman earns his money. I am entitled to inquire of the hon. Gentleman's expertise in telling the House how industrial tribunals operate. I would have thought that the hon. Gentleman, by not taking issue with the suggestion that he had not spent a lot of time at industrial tribunals, merely proved my point. This is a technical matter of changes in industrial tribunal rules. It seems unfortunate that these technical matters should be subjected to the tired and weary cliché s of the class war that

the hon. Gentleman seeks to bring forward.
The idea that these mostly drafting changes and only two changes of substance in the rules amount to an attack upon working people and their rights is nonsense. It might do the hon. Gentleman good to come along as an observer to hear one of the cases in which I appear. He might find it illustrative. It might improve the quality of his comment on the way in which the tribunals work.
Substantially, these regulations follow down the road that the last Government were travelling. Most of the changes are of a minor drafting nature. There are only four changes of substance, and to two of those the hon. Gentleman is hard put to take exception. One of them is related to an increased informality to which I should think he could hardly take exception. To be fair to him, he did not. The ones about consolidation proceedings and joinders are simply technical matters to save the tribunal's time and the parties' costs. If there are several actions arising out of one industrial accident I do not see how a procedure that enables all those matters to be disposed of at one hearing amounts to a class conspiracy. That rather defeats me, but it may appeal to Labour Back Benchers, which may be all that the hon. Member is concerned tonight to do.

Mr. Bruce Douglas-Mann (): I accept that the hon. Gentleman has had much greater experience in industrial tribunals than I, but does he accept that in any set of proceedings a power to order further and better particulars from an applicant who is not legally represented may frequently be used by a party who is represented as an oppressive measure? Does he accept that the power that is contained in the regulations is capable of being used as an oppressive measure, and that the regulations are in some respects unacceptable for that reason?

Mr. Mellor: The hon. Gentleman was kind enough, quite properly, to say that his experience in these matters was not very great. I have to tell him that the rules about further and better particulars are the same as were contained in the previous regulations. There is no change.


I am afraid that the hon. Gentleman's observations on the point are slightly off beam. If he is suggesting that these are new aspects he is wrong. They were contained in the regulations brought forward by his Government.
The two substantive changes are to be found in schedule 6, the pre-hearing assessment, and schedule 11, the addition as to costs. I should tell the hon. Member for Islington, Central, who is interested in my practice, that I appear both for applicants and respondents in these matters. I do not find myself in the position of having to defend one side or the other, but I find it difficult, whether I wear one hat or the other, to see why a pre-hearing assessment should not be an appropriate way of weeding out those applications that are totally without merit. Nothing could be better guaranteed to bring into disrepute the whole jurisdiction than people detaining, at huge cost in public money and to the individual litigants, tribunal time on cases that do not merit it. We all know the press publicity that is given to cases that are brought before tribunals and are plainly worthless. Any procedure that enables matters to be reviewed at an early stage should be welcomed.
The answer to the point that the hon. Gentleman makes, if he is sincere about the details and is not just seeking to make windy observations on the point, lies in this question. What is the draconian power in schedule 6 of which he is so afraid? Does the tribunal have the right peremptorily to strike out the proceedings, to say that they should not have the right to detain the tribunal? It does not. The provisions merely give the chairman the right to lean forward to the applicant, or even the respondent, and say that it appears that the proceedings are without foundation and to warn that if they are proceeded with the applicant or the respondent—whichever is appropriate—may be habile in costs. Try as I might, I cannot see that as a draconian power in the hands of a tribunal.
The hon. Gentleman gives the lie to his point by what he said at the end of his speech. He rightly paid tribute to the way in which industrial tribunals work, but is he suggesting that the same tribunals that he believes, as I do, operate

fairly—because they consist of a balanced team of a lawyer, a TUC representative and an employers' representative—will use this provision oppressively?—or is the truth of it that however hard he tries to stir up all this class-war nonsense about the regulations this is merely a way of enabling a small but troublesome minority of cases, which should never be brought in the first places, at least to have the prospect of being weeded out before a substantial amount of time is spent by the tribunal in hearing them?

Mr. David Mudd (): I should be grateful if my hon. Friend would respond to the point that I now put to him. The pre-hearing tribunal might indeed have certain powers that could be exercised on the side of the applicant. It might well say to him "Under the overwhelming majesty of the law you might be tempted to withdraw this application, but there is a scintilla of doubt that might be exercised in your favour." That might encourage the applicant to proceed.

Mr. Mellor: A company may think that there is nothing in the applicant's case. He may go before a tribunal. It is just as likely that the tribunal would say, on the contrary, "You say that this applicant has no case. We think that he has probably got a very good arguable case, and we say so." I am grateful to my hon. Friend.
I now turn to the argument about costs. I find this difficult to understand unless the hon. Gentleman would care, on some future occasion, to attack the basic principle of the law in this country, developed over centuries, that costs follow the event. One takes a decision, as a free individual in society, to bring legal proceedings, knowing full well that bringing them will involve great expense for the person against whom one brings them.
We take the risk that if we fail to prove our case we have to pay the loss that we have caused the individual in defending himself against the charges that we bring. If someone is run over in the street—I sincerely hope that the hon. Gentleman will not be—and he chooses to sue the driver, that is the basis on which he does it. If a contract that he enters into goes wrong and he sues the other party, that is the basis on which he goes to court.
What is so monstrous about going before a tribunal and being protected against the usual rule that the costs follow the event? Before he is entitled to recover what it cost him to fight the case, the man—it may be the applicant—who has had to pay a great deal of money for the purpose of being represented at the hearing finds that he must show not merely that he was right and entitled to be vindicated but that the other party had been unreasonable. Once one gets outside the rhetoric of the class war, what can be so wrong about that?
It was a standing disgrace to industrial tribunals that people were quite often able to pursue, for day after day, claims that had no possible foundation in fact or law, and that cost hundreds of pounds in terms of costs and waste of executive time, and then, having had their cases summarily thrown out by the tribunal, nevertheless were not required to compensate the other parties because the claims fell just short of being frivolous or vexatious. If the hon. Gentleman would look up his law he would find that the words "frivolous" and "vexatious" are defined very restrictively by the appellate courts.
What is so wrong? Are the Opposition here tonight to defend the principle that people who behave unreasonably should not have to pay for behaving unreasonably? Is that really the basis on which these hon. Gentlemen come before us tonight? I simply cannot think that there is not a better ground on which to choose to fight. Indeed, I go so far as to say that in doing what he did my hon. and learned Friend erred on the side of caution. I would be well prepared to stand here or anywhere else and advocate that the basic rules that apply in any court in this country should apply in industrial tribunals. We take the risk upon ourselves if we bring a case. If we lose, we pay for the extent to which we have inconvenienced and caused expense to the person against whom we claim. My hon. and learned Friend has taken the point that this may be a disincentive to those people to come before a tribunal and he has very reasonably and only marginally extended the powers of industrial tribunals to award costs.
I cannot help feeling that it will be humbug if the Opposition press a vote

on these regulations. I sincerely hope that they will not. Someone must make a better speech against these regulations than the hon. Member for Islington, Central managed before any Government supporters will be persuaded that there is substance in what the Opposition say.

Mr. Greville Janner (): I used to wonder why lawyers were so unpopular in the House; now I know. Having heard such condescension, such arrogance, and such lack of understanding of the purposes of a tribunal from the hon. Member for Putney (Mr. Mellor), I understand rather better why it is felt that those of us who are in the legal profession are trying to live off the miseries of others.
The hon. Gentleman does not seem to understand that those who go before industrial tribunals have been sacked. They have been dismissed, and they have no money. I remind him that that extreme Left-winger, the right hon. Member for Sidcup (Mr. Heath), introducer these provisions to give protection to those who lose their livelihood. He did so with the full support of the House.
The provisions were introduced in such a way as to give ordinary people the opportunity to claim rough and ready justice without fear—the right to go to a tribunal and to say "I have been dismissed unfairly." The hon. Gentleman indicated his utter ignorance by saying that the tribunal consists of lawyers and representatives of the TUC and CBI. It does not. There is a lawyer who is chairman and there are nominees of the TUC and CBI.

Mr. Mellor: A technicality.

Mr. Janner: That is not a technicality. Tribunal members would object most fiercely if they were called representatives of the TUC or of the CBI. They sit to do justice. They are there to try to act in a fair way and to give claimants their rights. It is no technicality. To suggest that it is is an example of ignorance from a person who says that he is regularly before the tribunals. He should know better. He should not criticise my hon. Friend the Member for Islington, Central (Mr. Grant) for doing his job in a first-class way.
The hon. Gentleman should understand that those who are represented and advised by trade unions are often very much better off when they appear before tribunals than those who have no such representation. Those who will suffer from the proposed change are not so much trade union members as people such as managers, directors, supervisors and foremen,. In these times of hardship those who fall into those categories are loing their jobs unfairly every day of the week. They are being made redundant unfairly and sacked unfairly. They are appearing before the tribunals.
The hon. Gentleman says that costs should go with the event. He argues that claimants should bear the costs if they lose. That is new, even for Conservative Members. It is something that will not go down very well with those who are in the trouble that I have described in the hon. Gentleman's constituency and who were misguided enough to support him in the election.

Mr. D. N. Campbell-Savours (): Let us have a by-election.

Mr. Janner: The hon. Gentleman should study the realities of industrial tribunal procedures before he attacks my hon. Friend. If he did so he would realise that we are not discussing technical changes. The pre-hearing change is extremely important. All those who have dealt with tribunals have tried to find a suitable sieve to avoid cases coming forward that should not take up the time of the tribunal. The problem has been to find a sieve that would not remove cases that required a hearing, and which would not prevent claimants from getting their rights.
There are those who bring cases before tribunals who should not do so. There is a 72 per cent. failure rate. Some claims should not be presented before a tribunal. Equally, I am convinced that there are even more ordinary folk who do not bring their cases to tribunals because they are terrified of being labelled as trouble makers and never getting another job. That is another real problem, of which the hon. Gentleman would be aware if he had any contact with industry. I doubt whether he has ever had such contact. I doubt whether he has ever set foot in a factory or office. I

cannot conceive that he has the least conception of the problems that are faced.
The problem of the pre-hearing assessment is how to introduce a sieve that will not remove genuine cases. It is a real problem. The Government have decided—

Mr. Dennis Skinner (): Who holds the sieve, that is the problem?

Mr. Janner: In this case the people who hold the sieve are not a gang of lawyers. My hon. Friend must not confuse me with the hon. Member for Putney, particularly as my hon. Friend may need us before long.

Mr. Skinner: Who, you?

Mr. Janner: Lawyers have a purpose in upholding the rule of law and attempting to ensure that people get justice. A lawyer as chairman of a tribunal is no bad thing at all. No one has thought of a better idea.
The sieve of the pre-hearing assessment is held by the people who hold it in the hearing itself. That is not the problem. The problem is whether they will sift out cases that should go forward to trial. The pre-hearing assessment is not merely on documentation; it can include any representation in writing and any oral argument. In other words, it seems to me—and this is the major point—that we risk doubling the time taken, and not halving it.
The second point is that people who are now going to a tribunal are told "You don't have to worry. You are unemployed. Very well, you can get to the tribunal and put forward your case. Don't worry. You won't have to pay costs. Indeed, you will have your expenses paid. You won't get legal aid. You will have to put forward your own case or get a union to do it, or you will have to pay for it, but at least you know that you won't have to pay the costs of the other side". It is a swift hearing, and at a time when people are being sacked at such a rate it is a valuable right, given by the 1971 Act, improved by the 1974 Act, strengthened by the 1975 Act and now in the process of being whittled down.
Instead of those cases where costs are incurred because a person acted frivolously or vexatiously, we are now to


interpret the words "otherwise unreasonable". The problem about reasonableness is that it is subjective. What I think is reasonable is obviously not what the hon. Member for Putney thinks is reasonable, and what he thinks is reasonable I should not have thought is what anyone else in his right mind would think is reasonable. When one considers reasonableness, one finds that it is always what one thinks is right.
I am prepared to agree on that, especially when one listens to the decisions of judges. Many of my friends are judges. Some of them are very reasonable people, and some of them are wholly unreasonable. However, once one inserts the question of reasonableness one introduces an element that is absolutely impossible for anyone to pin down. When one says that costs are incurred because someone unreasonably brought proceedings, one is making the bringing of proceedings in tribunals very dangerous indeed for people who have been dismissed and who have no money. What one is doing—and this is the real danger—is driving people out of a right that was given to them by Parliament, without a Division. It was about the only part of the Industrial Relations Act that was non-contentious, which we thought that even Attila and the extreme Right had agreed. We are now told that even this is a matter of class war.
I suggest that at a time of desperate hardship for people, literally millions of whom are now out of work, we should all be trying to help them to get the rights that they should have, presented to them by a tribunal, without having to incur the fear of costs which they know they cannot bear. We are removing rights in a way that I am sure the Under-Secretary does not intend to do. I am sure that he will say that this is essentially a technical matter and that it is a good-hearted and well-intentioned effort to prevent employers from having to face heavy costs in cases that should never have been brought.
We already have a sieve. The conciliation officers do a first-class job. They try to bring people to terms. The number of cases that fail is now more than 72 per cent. The number of cases brought to tribunals has dropped by 26 per cent. since 1 October, when the qualifying

period was increased from 26 to 52 weeks. Surely enough harm has already been done to people who cannot bear it. Surely these regulations should not have included a pre-hearing assessment and costs that people will not be able to bear if they lose. I hope that the regulations will be rejected.

Mr. Douglas Hogg (): The hon. and learned Member for Leicester, West (Mr. Janner) has just made an emotional speech. He generally makes emotional speeches. One wonders whether he is capable of making an unemotional speech. He and the hon. Member for Islington, Central (Mr. Grant) demonstrated that there is no good reason for annulling these regulations.
In all material respects, these regulations are the same as the 1974 regulations as amended three times thereafter by Labour Members. I listened carefully to the comments of the hon. and learned Member for Leicester, West and the hon. Member for Islington, Central. In effect, they grumbled about four aspects of the regulations. Their belly aches were merely flatulent and added nothing to the debate. They criticised the pre-hearing assessment suggesting that in some way it would be used in an arbtirary and vindictive way in order to put pressure upon an employee to drop a case. That is complete nonsense. It reveals an ignorance about the way in which tribunals operate.
Broadly speaking, I have complete confidence in the tribunal system. I have rarely known tribunals to act unfairly. There is no bias against the employee. Indeed, it might be argued by some that the converse is true. I believe that the pre-hearing assessment is a very valuable safeguard to both parties. It is obviously a valuable safeguard to an employer, in that he should not be troubled by an unmeritorious case. It is equally important that the employee should know whether he has a reasonable prospect of obtaining compensation. Nothing is worse than an employee who harbours a delusion. Frequently, an employee believes that he has a good case when in reality he has not. Frequently, he refrains from seeking alternative employment in the belief that a reinstatement or re-engagement order is about to be made.


It is highly desirable that a fair, independent tribunal should have the opportunity to tell one party or the other that the case is without merit and should not be carried any further.
These regulations impose no harsh sanction. The tribunal can merely say that it is possible that a subsequent tribunal will hold that the attitude of the employee or the employer is frivolous, vexatious or otherwise unreasonable, and that he may be liable for costs. The regulations impose a modest sanction, which helps the employee who is facing the problem of conducting litigation on his own behalf.
On the question of costs, I have the misfortune to disagree with my hon. Friend the Member for Putney (Mr. Mellor). I do not think that the ordinary rule for costs should apply in tribunals of this sort. Although I generally disagree with the hon. and learned Member for Leicester, West, I think that on this point he is right in saying that a different rule on costs should apply to industrial tribunals. Basically, I agree with his argument on that point. At the same time, I am certain that the regulations are fair and reasonable.
It is to be noted that, as a general rule, costs are not to be awarded. That proposition is enshrined in the regulations from which these regulations in no way detract. Costs will be awarded only where one or other party—and it can be either party—has acted frivolously, vexatiously or wholly unreasonably.
The hon. and learned Member for Leicester, West expressed difficulty in understanding "unreasonable". But "unreasonable" appears time and again in our legislation. It is bound to be subjective in a sense, but it has not given rise to problems in the past. Indeed, if the hon. and learned Gentleman looks at the 1974 legislation, of which he is well informed, he will discover the words "reasonable" and "fair" repeatedly. Therefore, I suggest that the argument on this point is again wholly without merit.
The final point made by the hon. Member for Islington, Central, concerning discovery, was surprising. He suggested that this was a new regulation, which would burden the complainant. A number of points can be made about this matter.

First, this is not a new regulation. If the hon. Gentleman looks at the previous regulations he will find that in substance the discovery rules are the same. If they were good in the 1974 regulations, introduced by the Labour Government, I do not see how he can bellyache about them in the 1980 regulations.
This is a curious instance of the hon. Gentleman's doing a mischief to his constituents. As a matter of general practice, employees do not have any documents to produce on discovery. Employers have many documents to produce on discovery. Understandably, an employee—[Interruption.] I do not mind Opposition Members chattering away. They never listen to common sense. They always chatter. They are incapable of approaching important matters with open minds. It does not trouble me. If they want to go on chattering, they may do so, but I hope that at least the Opposition Front Bench will take this matter seriously.
Relevant documents are always possessed by the employer, and it is important that the employee should have an early opportunity of getting them. These regulations provide that opportunity.
We must look at these regulations in broad terms. They are, in substance and form, the same as the 1974 regulations. There is and can be no legitimate argument for opposing them.
Apart from the bad manners, prejudice, closed minds and ignorance of the hon. Members for Bolsover (Mr. Skinner) and Keighley (Mr. Cryer) and the whole of the Tribune Front Bench, we are seeing the old prejudice reasserting its ugly head. I am sure that the House will reject the prayer.

The Under-Secretary of State for Employment (Mr. Patrick Mayhew): The debate has been interesting, and has revealed certain well-rehearsed positions. It is important to explain what led the Government to put these new regulations before the House.
I agree with those of my hon. Friends who have said that the vast majority of the regulations make technical changes. It is important to note that the regulations take the form of a useful consolidation measure, which has been in preparation for some time. We have had the assistance of the presidents of the industrial


tribunals for Scotland, England and Wales. Most of the changes are non-controversial. They are designed to facilitate the smooth and just operation of the tribunals. AH the changes were made in close consultation with the presidents. I should like to express gratitude to them for the advice and help that they gave to the Department.
Those who have expressed doubts about the fairness of the regulations should bear in mind that they have the full approval of the Council on Tribunals, to which we were required to submit them in draft form under the Tribunals and Inquiries Act 1971. I hope that that will give some reassurance to those who have genuine misgivings about the regulations.
We took the opportunity afforded by consolidation to make three more significant changes. They are contained in rules 6, 8 and 11. We consulted widely on the changes, which were put forward last year in the working paper on the individual rights provisions of the employment protection legislation. Those proposals met with a wide degree of support. The first change on which we consulted concerned an attempt to reduce legalism at tribunal hearings. Our consultations are reflected in rule 8, which provides that:
The tribunal shall conduct the hearing in such manner as it considers most suitable to the clarification of the issues before it and generally to the just handling of the proceedings; it shall so far as appears to it appropriate seek to avoid formality in its proceedings and it shall not be bound by any enactment or rule of law relating to the admissibility of evidence in proceedings before the courts of law.
Try as one might, it would be difficult to find a sinister intent behind those provisions. We want to emphasise what the majority of tribunals demonstrate, namely, that the purpose of industrial tribunals is to provide a speedy, informal and simple means of disposing of the issues brought before them. It is desirable to spell that out in black and white.
I acknowledge that most tribunals conduct their proceedings in that way. Why, then, should it be spelt out? Rightly or wrongly, there is a widespread feeling—particularly among small businesses and employees—that industrial tribunals are complicated and mysterious and that one must be represented by a lawyer if one

is to have any hope of succeeding. In order to dispel that mistaken but important view, we thought it right to introduce rule 8.
In paragraph (2) of the rule we cut out the right of each party t6 make an opening statement as well as a closing address. The purpose of the change, which the presidents of the tribunals considered of particular importance, is to streamline tribunal proceedings and to discourage legalism. They are not supposed to be like ordinary courts of law. There has been a trend for parties to choose to be legally represented before a tribunal. Such trends tend to gather momentum, since if one party is represented the other is likely to feel that he will be at a disadvantage if he is not represented. I hope that I should be the last to under-estimate the advantage to a tribunal of a competent advocate appearing before it. Such an advocate ought to focus attention on the relevant points and thereby shorten, not lengthen, the proceedings. This is of particular value in complex cases.
In the great majority of cases coming before industrial tribunals legal representation is not necessary, and we are particularly anxious to dispel any belief among the public that it is necessary by reason of the supposed formality of tribunal proceedings. That is why we have introduced this change, which we hope will encourage tribunal chairmen to take more of a grip on proceedings. I am glad to say that it has met with almost unqualified support from employee and employer organisations that we have consulted.
The other two major changes embodied in rules 6 and 11 are directed at preventing cases without merit reaching a full tribunal hearing. I know that there is a sieve represented by the conciliation procedures. It is fair to say that the statistics of cases that have been settled following intervention by the conciliation officers can, unwittingly, be misleading, because we all know that there are employers who reckon that they have an unbeatable case and that their defence is bound to succeed but who are put off by the sheer cost and inconvenience entailed in spending two, three or more days at the tribunal with their foreman and production manager, a couple of key witnesses This involves inconvenience to


their factory or workshop, and at the end of it all, while they would win, they would not get any costs. The result is that they settle, because the conciliation officer perfectly properly says "I think he will take £200 or £300 to call the thing off."
That is what happens. It happens because there is not a sufficient means by which tribunals may sift out such cases, or do their best to sift them out, because these regulations do not give them power summarily to dismiss a claim that is seen to be unlikely to succeed. There is insufficient means for the tribunals to say to a claimant "Look, it is up to you, but we think, having heard you and heard anything further you have wanted to say, that you have got a hopeless case."
My hon. Friend the Member for Grantham (Mr. Hogg) was right to say that it is helpful for many claimants who are employees—certainly those who have not got legal representation—to be told whether they have a cat in hell's chance. I agree with him. Many people must realise that this has the ring of truth about it. Many people nourish illusions, which become obsessions, and they are convinced that they are bound to win. They are likely to take such advice from a tribunal when they might not take it from a lawyer or anyone else. It will be the whole tribunal that sits at this prehearing assessment. People may take it from the tribunal, which will say "Look, you can go ahead if you like, but you have not got a cat in hell's chance and you will be at risk for costs if you go on and lose."

Mr. Douglas-Mann: I accept that the requirement in rule 4 to provide further and better particulars existed in earlier regulations. Does the Minister think that it will be necessary for the tribunal both to have the power to require a claimant, in the circumstances he is outlining, to provide further and better particulars of his claim or, in the absence of those particulars, to know that the case is liable to be struck out and, in addition, for there to be the new power introduced by rule 6? Is not the Minister so loading the dice against the applicant that a very substantial number of potentially successful cases will be deterred? The tribunal has the power, by requiring further and better particulars, to deter the claimant who cannot sustain a case from pursuing

it. Is it not superfluous to have the new powers in rule 6? If those are necessary, should he not abandon the powers in rule 4 to strike out a case?

Mr. Mayhew: I see the hon. Gentleman's point, but he fails to recognise that the two rules provide for different circumstances. Rule 4, which provides for requiring further particulars before the employer need enter an appearance, deals with the case where the claim as presented is obscure, but it does not necessarily follow that the claim is bound to fail. Therefore, one needs both the provision whereby the tribunal may give the warning that I have just been discussing, where it believes that the claim is bound to fail, or is almost certain to fail, and the provision that allows an employer to ask for further particulars to deal with the case where there is obscurity, where he cannot know how to deal with the claim until it has been made clearer. Therefore, I do not think that they necessarily overlap; there is a case for both.
The presidents of the industrial tribunals, who, after all, are in touch with the tribunals' day-to-day work, and themselves sit on quite a number of the cases, consider that public money is being wasted in a certain number of cases on full hearings which have no merit. That is why we have made the changes in rules 6 and 11.
I do not think—if I thought otherwise I should not be advising the House to accept these rules—that this procedure will be capable of putting pressure upon, deterring or intimidating an employee bringing a claim for, for example, unfair dismissal. It applies both ways. The rule makes it perfectly clear that the pre-hearing assessment applies to any party's representations—employer as well as employee—in the case of unfair dismissal.
I should also deal with the change that is proposed for costs. Rule 11 provides that tribunals may award costs where a party has behaved unreasonbly. It is right, as more than one hon. Member has said, that the present rule permits the award of costs only where it is held to have been frivolous or vexatious to bring the claim. The term "frivolous or vexatious" is tightly construed, and the result is that only in 2 per cent. of cases


are costs awarded. The Shorter Oxford English Dictionary says that "frivolous" means
manifestly futile, characterised by lack of seriousness, sense or relevance".
The important point is that the employer recognises that even if he wins he has no substantial chance of getting any contribution towards the expense to which he has been put.
The hon. and learned Member for Leicester, West (Mr. Janner) said that it was a subjective and very unreliable test to introduce the concept of reasonableness. I am surprised to hear someone from my own profession say that. The key concept of English common law is what is reasonable. If the courts and tribunals cannot distinguish what is reasonable from what is unreasonable, we have slipped very far.
I draw some fortification from the fact that the employment appeal tribunal, under rules passed under the last Government in 1976—the employment appeal tribunal rules—itself must have regard to what is reasonable. Rule 21 says:
Where it appears to the Appeal Tribunal that any proceedings were unnecessary, improper or vexatious or that there has been unreasonable delay or other unreasonable conduct in bringing or conducting the proceedings, the Tribunal may order the party at fault to pay
costs, or a contribution towards them. That was considered by the hon. and learned Gentleman's Government to be

NOES


Alexander, Richard
Brinton, Tim
Clarke, Kenneth (Rushcliffe)


Alison, Michael
Brooke, Hon Peter
Dean, Paul (North Somerset)


Alton, David
Brown, Michael (Brigg & Sc'thorpe)
Dorrell, Stephen


Baker, Nicholas (North Dorset)
Bruce-Gardyne, John
Douglas-Hamilton, Lord James


Benyon, Thomas (Abingdon)
Buck, Antony
Dover, Denshore


Berry, Hon Anthony
Cadbury, Jocelyn
Dunn, Robert (Dartford)


Blackburn, John
Carlisle, John (Luton West)
Eyre, Reginald


Boyson, Dr Rhodes
Carlisle, Kenneth (Lincoln)
Garel-Jones, Tristan


Bright, Graham
Chapman, Sydney
Griffiths, Peter (Portsmouth N)

perfectly all right, and the former Lord Chancellor signed those rules.
If the hon. and learned Gentleman reflects he will realise that there will not be the slightest difficulty in a tribunal's applying this concept. I believe that it is a sensible widening of the safeguard that the present very tiny ability to award costs affords to an employer. We do not think that it will be a major change. I do not think that in practice the tribunals will interpret the new rule much more widely than the old one, but it will be a useful reassurance to those employers, particularly small employers, who believe that the dice are unfairly loaded against them. It is because, regrettably and in many cases unjustifiably, there is this belief that the opportunities for people to gain employment with small firms are unnecessarily curtailed.
It is late at night and I hope that I have dealt with the points that have been raised. I believe that the House wants to come to a conclusion. I have listened to all the points that have been made in support of the prayer, but I do not think that they have been made with great conviction. An objective and reasonable assessment of the weight of the argument must lead to the rejection of the prayer.

Question put:—

The House divided: Ayes 44, Noes 92.

Hampson, Dr Keith
Mellor, David
Speed, Keith


Hawkins, Paul
Miller, Hal (Bromsgrove & Redditch)
Speller, Tony


Hawksley, Warren
Mills, lain (Meriden)
Spicer, Jim (West Dorset)


Heddle, John
Moate, Roger
Spicer, Michael (S Worcestershire)


Hogg, Hon Douglas (Grantham)
Morrison, Hon Peter (City of Chester)
Stainton, Keith


Hooson, Tom
Mudd, David
Stanbrook, Ivor


Hurd, Hon Douglas
Neale, Gerrard
Stevens, Martin


Jopling, Rt Hon Michael
Nelson, Anthony
Stradling Thomas, J.


Kellett-Bowman, Mrs Elaine
Newton, Tony
Taylor, Teddy (Southend East)


Kershaw, Anthony
Normanton, Tom
Thompson, Donald


Le Marchant, Spencer
Onslow, Cranley
Waddington, David


Lester, Jim (Beeston)
Page, Rt Hon Sir Graham (Crosby)
Wakeham, John


Lloyd, Peter (Fareham)
Page, Richard (SW Hertfordshire)
Walker, Bill (Perth & E Perthshire)


Loveridge, John
Penhaligon, David
Waller, Gary


Lyell, Nicholas
Prior, Rt Hon James
Wheeler, John


MacGregor, John
Proctor, K. Harvey
Wickenden, Keith


McNair-Wilson, Michael (Newbury)
Rathbone, Tim
Winterton, Nicholas


McNair-Wilson, Patrick (New Forest)
Renton, Tim
Wolfson, Mark


Major, John
Ross, Stephen (Isle of Wight)
Young, Sir George (Acton)


Marlow, Tony
Sainsbury, Hon Timothy



Mates, Michael
Shaw, Giles (Pudsey)
TELLERS FOR THE NOES:


Mather, Carol
Shepherd, Colin (Hereford)
Mr. Robert Boscawen and


Mayhew, Patrick
Skeet. T. H. H.
Mr. John Cope.

Question accordingly negatived.

PETITION

ELDERLY AND HANDICAPPED PERSONS (ACCOMMODATION)

Mr. Peter Hardy (): Although it is almost 1 o'clock, I should like to present a petition from the Rotherham borough council. My hon. Friends the Members for Dearne Valley (Mr. Wainwright) and Rotherham (Mr. Crowther), who are in the Chamber, wish to be associated with the presentation, and we offer our full support for the petition.
Given the relevance of the petition, in view of the embarrassing position in which the Government have been placed in another place, it may be appropriate for me to read the petition in full. It says:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
The Humble Petition of the Rotherham Borough Council. Showeth:
That your Petitioners, being the local housing authority for their borough, have taken note of impending legislation contained in the Housing Bill in which it is proposed to provide for the sale of council houses and, further, have taken note of a public petition to them on the matter".
That petition was taken by my hon. Friends and I, with the mayor of Rotherham, Councillor Sidney Bennett, and the housing chairman, Councillor Fred Cooper, to the Department of the Environment last week. That petition, which is part of the council's submission reads:

We the undersigned, being residents or ratepayers within the Metropolitan Borough of Rotherham, urgently request the Council to petition the Secretary of State for the Environment to reconsider that part of the Housing Bill now before Parliament which deals with those properties which are to be excluded from sale by the local authority. We ask that the number of those properties be increased to include all purpose-built units of accommodation for the elderly, i.e. bungalows and ground floor flats, and ail purpose-built or purpose-adapted accomodation for the disabled or handicapped so that such units of accommodation are available to let to all those elderly, disabled or handicapped whose names are on the Council's waiting list for such properties.
The council's petition goes on:
Your Petitioners did on the Second day of July 1980 pass the following resolution:—
This Council
Take Note of the proposed legislation contained in the Housing Bill concerning the sale of Council houses;
Take Note too, of the public petition on the matter which is to be forwarded to Her Majesty's Government for their information.
Welcomes the proposals to exclude some 2,200 units of purpose-built sheltered accommodation for the elderly in Rotherham from such sales;
Deplores the proposals of Her Majesty's Government not to allow a further 4,300 units of purpose-built accommodation for the elderly, i.e. bungalows and ground floor flats, plus a further number of purpose-built or purpose-adapted properties for the handicapped and disabled, to be excluded from such sales, despite, in the case of the 4,300 units recognition of those units as special accommodation by the Home Office for the purposes of concessionary television licences;
Invites Her Majesty's Government to reconsider its position and to reconsider the plight of the 5,910 aged Rotherham residents whose names are still on the waiting list for sheltered or purpose-built accommodation.
Wherefore your Petitioners pray that your Honourable House will ensure that the


Housing Bill is amended to provide appropriate safeguards in respect of purpose-built and purpose-adapted accommodation for the elderly, handicapped and disabled. And your Petitioners, as in duty bound will ever pray, Etc.
The Commons Seal of the Rotherham Borough Council was hereunto fixed this Twenty-first day of July 1980 in the presence of Mr. Lawrence Frost, Chief Executive.

To lie upon the table.

HOMELESS PERSONS (HEALTH CARE)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooke.]

1 am

Mr. Ernie Roberts (): Many people for whom I speak in this debate have already gone to their beds on park benches, or in shop doorways, disused factories, empty or derelict properties, or on the pavements, or are squatting. The rest are still wandering about seeking shelter and a place to rest their bodies.
It is estimated that there are about 100,000 such people in the United Kingdom. About 60,000 of them are in hostels or lodgings each night. In London on any night about 2,000 people sleep out. In Hackney there are about 3,000 single homeless people. They are homeless, rootless and healthless.
Not many people care about the single homeless. They say that they smell, that they are ragged, drunk, or mentally ill. People are embarrassed by them. They cannot get medical treatment when they are ill. General practitioners, who are legally bound to give treatment and are morally bound by the Hippocratic oath to serve the sick, reject the down-and-out single homeless for fear of offending their respectable clientele.
The single homeless are driven to hospitals and casualty departments for primary treatment. Generally they are received sympathetically by overworked casualty staff. The homeless come to rely on them to provide treatment for ills brought on by their homelessness. Complaints such as bronchitis, tuberculosis, dietary deficiencies and foot problems are suffered by people who sleep rough or who are turned out of hostels at 9 am to

tramp the streets and search for food or work.
Hospitals that are already overcrowded and starved of finance admit in-patients only as a last resort. The case of Tom Fraser has been reported. He was a 57-year-old homeless man who died alone and untreated in a local graveyard after being turned away twice from a Hackney hospital because casualty staff considered that he was drunk. The post mortem revealed that he had sustained a fractured skull and had died of brain haemorrhage. That is one among many similar cases. People who are admitted to hospital are treated and discharged without the hospital authorities realising that they have no homes. They return to the streets and their illness recurs.
The Hackney community health council produced a report. It looked comprehensively at the range of health care facilities—primary care, casualty, hospital after-care, psychiatric and alcoholic services—available for the homeless in the district. It found that GPs were unwilling to accept single homeless patients. Four out of six doctors approached by a homeless man refused to register or treat a patient without a fixed address. Casualty departments were unable to ensure proper treatment in every case. Homeless people without a GP have relied on casualty departments for basic medical care. Yet inner city casualty units have been cut and those remaining open are shedding their primary care functions. Hospital wards were discharging unsupported single patients home to recuperate in insanitary hostels or on the streets. This practice undoes the benefit of hospital care but, as with most inner city districts, there are no aftercare facilities such as half-way houses or hostels, or sick bays in the City or Hackney areas.
The Hackney community health council has made constructive proposals on how services can be improved. It suggests the active encouragement of GPs to register more homeless patients on their lists, so that single homeless people can be reintegrated into the mainstream of the Health Service, where they belong as of right. Another proposal is for an educational role for the area health authority in developing the understanding of Health Service personnel of the social background and needs of homeless patients.
The council calls for a systematic check on patients at hospitals to discover whether they have a home and a GP to go to on discharge, and the provision of a small, local after-care unit. It also calls on the Government to allocate money earmarked for the development of services for specific deprived groups in our communities, because the problems of the single homeless are national. We have to ask the Government to stop cutting back the financial support given to voluntary agencies providing succour for the suffering single homeless. The GPs are not responsible for these problems; they are on the receiving end of a number of problems in the lives of the homeless, the rootless and the jobless.
The single homeless are not all vagrants, alcoholics or mentally sick. The 1977 report of the Supplementary Benefits Commission, presented to Parliament by the Secretary of State, in a chapter headed "People 'without a settled way of living'" refers to
'persons who have shown a continuing failure to cope with the demands of society, to form personal ties, to find or hold employment, to find a place to live, and to respond to rehabilitation or deterrence.' The Home Office point out that this description is coloured by their particular interest in this group as being likely to offend, but it is nevertheless a useful description of a group of people who, while 'at risk', are not necessarily offenders.
The report goes on to say that section 24 of the 1824 Act, the basis of modern vagrancy legislation,
prohibits a person 'wandering abroad and lodging in any barn or outhouse or in any deserted or unoccupied building or in the open air or under a tent or in any cart or wagon and not giving a good account of himself.' This offence is, however, limited by section 1 of the Vagrancy Act 1935 which makes it necessary to prove either:—

(a) that the person concerned has on the occasion in question been directed to a reasonably accessible place of shelter where accommodation is regularly provided free of charge and has failed to apply for or refused accommodation there; or
(b) that he is a person who persistently wanders abroad and, notwithstanding that a place of shelter is reasonably accessible, lodges or attempts to lodge as provided in the section; or
(c) that by or in the course of such lodging he causes or appears likely to cause damage to property, infection with vermin or other offensive consequence.'"

Those are the descriptions given to people without a settled way of life.

Who are these people? The majority of the single homeless are not in this category, as is evidenced by the facts gathered by the After 6 housing advisory service. During 1979 the cases of 9,600 single homeless were referred to it. Of these, 50 per cent. were under 25 years of age; 60 per cent. were working; 8 per cent were on social security. Of those working, 59 per cent. were getting less than £50 a week and could not afford private rented accommodation. Of those referred, 33 per cent. had only accommodation problems; 18 per cent. had marriage or family breakdown; 4 per cent. were eviction cases; 32 per cent. were job seekers in London—and that is an important factor. Only 7 per cent. had drink or drug problems.
This organisation, which gives 24-hour cover for the homeless, is suffering from financial cuts by the Government. I find that 18 voluntary hostels in East and North London are in jeopardy from Government cuts. In my constituency one organisation, called Roma, which deals with drug addiction, has been closed because of the Government cutback.
I move to another report, on the Great Chapel Street medical centre for the young homeless under 25 years of age. It has examined 364 cases referred to it over the past year by many organisations. Of those 48 young people were suffering from coughs, colds, influenza and chest pains. A total of 26 were suffering from skin diseases, scabies, boils, lice, and so on. A further 32 were suffering from sore and blistering feet, and other foot problems. A total of 28 suffered from internal and stomach complaints, 40 from depression, insomnia and psychiatric problems, and 28 from drugs and alcoholic problems. These are just the kind of complaints that young people seeking work in London would contract. I urge the Minister to draw that fact to the attention of the Prime Minister when she advises young unemployed to leave their homes and seek work in places like London and the other great conurbations. These young people need jobs and homes as well as medical treatment.
The organisation reports on what it calls a typical case. A typical patient is a 21-year-old man. He is single. He was brought up in Scotland and is a Protestant. Although he is registered with a doctor at home he has no doctor


in the Greater London area. He has been in London for about three weeks. He is looking for a job. At home his last job was as a labourer, but he is happy to take any job in London. Since he has been in London he has made no attempt to register with the local doctor, mainly because he has not needed medical attention. He now has a sore throat and a cold and thinks he might have 'flu. He spent the previous night at the West End reception centre, and was referred to the medical centre by that body. This portrait is drawn from the data collected from the files of 150 similar cases in that centre.
In its issue yesterday the Evening News pointed out that there will be an invasion of young people into London seeking jobs. The forecast is that in this region unemployment could double to 633,000 as a result of that kind of invasion. The problem of the young homeless will therefore grow. They will have all the problems to which I have referred.
Let me refer here to the case of young Tim, which can be regarded as a typical case.
Tim has painful feet from walking around in cheap shoes. He has also had a cold and chest pains for the past few days. When the nurse is free, the administrator shows him into her room and gives her his file. She looks at his feet, which are badly blistered. She washes them and then applies medicated foot powder. She gives him the remainder of the tin for his own use in the future. She also advises him to try and wash his feet and socks nightly. Tim mentions to the nurse that he has been feeling ill for the last few days. She asks him what his symptoms are. After taking his temperature and pulse she suggests that he returns to the waiting room until he can see the doctor. After examination, the doctor diagnoses that Tim has bronchitis. Normally, this complaint can be treated by antibiotics and a couple of days in bed; but Tim has nowhere to stay and has been sleeping rough. On the doctor's instructions, he is given a course of antibiotics by the nurse and told how many to take each day.
And so he will be back again in the hospital and probably in a more serious condition. These are the conditions under which the single homeless are living in London and other parts of the United Kingdom.
This problem will get worse. That is why I was concerned about raising it. The 2 million unemployed—who were told by the Prime Minister to leave their homes in South Wales, Scotland, the North-East, of wherever to seek work

elsewhere—will arrive in the South-East, in London, and many of them will find themselves destitute, without a job or a home. They will sleep on park benches or in doorways, as they did in the 1930s. These are the single homeless as well. Speaking personally, I remember being driven in the 1930s from my own parents' home by unemployment and the means test in the same conditions as now exist. I also remember walking the streets for three years as unemployed. I appreciate the conditions that these young people are experiencing as a result of being thrown out of work, seeking employment away from their homes, finding themselves on the streets, and becoming the wandering, homeless, so-called vagrants, the number of whom is growing.
In Hackney there are 200 young homeless squatting in Morley House. Many have a job, but no home or GP. Hackney borough gets up to about 30 single, childless, homeless couples each week. All that they receive is advice about bed-and-breakfast hotels, or other agencies. About 300 persons go on the housing waiting list every month. One-third of these are single homeless people. There are 13,000 on the waiting list in our borough. One-third of these are single homeless people. In the next 12 months Hackney's supply of housing will be 2,263, from all sources. There will be a likely demand for 15,000 dwellings. That is the main reason for the homeless and healthless in Hackney.
Today I saw a heading that is in most of the national newspapers. It says
Charles to pay £1 million for country home?
He is a single person who certainly will not be homeless but who will spend a considerable sum of money to provide himself with another home. He is quitting Chevening House, which is a 115-room mansion near Sevenoaks, Kent. Perhaps he or the authorities can be persuaded to allow the young, single homeless, healthless of London to occupy that property. This is a problem that must receive the attention of the Government, and the finance must be made available.

The Under-Secretary of State for Health and Social Security (Sir George Young): I am grateful to the hon. Gentleman for the opportunity to speak on this


subject. In the time that is available to me I should like to concentrate on the health aspect of the case that he has raised, and perhaps ask my hon. Friend the Under-Secretary of State for the Environment to write to him about the homeless aspects that he mentioned.
Of course, the Government are concerned about the health needs of single homeless people. I am well aware of the cases concerning individuals which have been cited by the City and Hackney community health council in the report "Homeless and Healthless", which I have read. I have also read of the sad case of Thomas Frazer, which provided the initial inspiration for the production of the report.
It has been suggested by the community health council and by the hon. Gentleman tonight that the best way to meet the hidden needs of the homeless for health care would be by allocating special central Government funds for the purpose. In support of this, I recognise that it can be argued that the mobility of this group and some of their less attractive characteristics are obstacles to meeting their needs out of limited local resources. It is the belief of Government, however, that this would not be the right answer, either in the long or the short term, for the following reasons.
First, to provide a national allocation for one group would mean deciding how much total money to allocate, how it should be divided between different areas and between the whole range of health and social needs for this group of clients within these areas. How should control be exercised? Who should do this? Where would they get their information from if not from the authorities already providing local services? At a time of economic constraint this additional operation would put an extra burden upon the management of the health services which we would like to avoid. It would also distort priorities.
I want now to explain the specific ways in which the health needs of homeless people can be met within services in the population generally and to answer the particular points raised by the hon. Gentleman. I refer first of all to the ways in which the homeless are provided for within the existing arrangements

relating to health care by general practitioners.
It is not uncommon for any person to find that the first doctor he approaches cannot or does not wish to take him on. This experience is by no means confined to the homeless and rootless. If a person is unable to find any doctor willing to accept him, he can ask the local family practitioner committee to assign him to a doctor, who is then bound by his terms of service to take him.
In practice, family practitioner committees manage to find a doctor for people who apply to them, whether using their powers of assignment or otherwise. I believe these arrangements generally work well. They help to secure that people register with doctors who are not unsympathetic to any group they happen to belong to, or to their lifestyle.
For a person to be accepted voluntarily by a doctor or to be assigned to a doctor, it is not essential to have a permanent residence, though I recognise that a person who does not have one may encounter greater difficulties in getting a doctor to take him on.
The voluntary system inevitably means that certain sympathetic doctors may take on more than their fair share of homeless people. However, the allocation system acts as a safety net, in that an overburdened doctor may ask for cases to be redirected by assignation.
Registration on a doctor's list is not the only way in which a person can get the services of a family doctor. If he is staying in an area temporarily—for more than 24 hours, or up to three months—he may ask any doctor practising in the area to accept him as a temporary resident. This, like registration on a normal basis, is voluntary on both sides, but the family practitioner committee will help if a person has difficulty in finding a doctor. The community health council will also give advice where necessary.
There is also provision that a person who is in need of immediate treatment may approach any doctor who provides NHS services in the area where he happens to be, and that doctor is obliged to give the patient any treatment that is immediately necessary for up to 14 days or until the patient is accepted elsewhere as a temporary resident, whichever occurs sooner.
Where a family practitioner committee experiences difficulty in finding doctors willing to take on the care of residents in hostels or other establishments for the care of the homeless, it can, even if its area is one with sufficient doctors, seek the admission of an additional doctor for the limited purpose of providing general medical services to residents of these hostels. It will find that there are some doctors prepared to take a special interest in this work.
For example, doctors in the area were for some time prepared to treat a group of itinerant people living on a caravan site in the Hackney area. Although the people in question were required to move to a different, unregistered site, in Tower Hamlets, the doctors who had earlier treated them continued to do so.
I recognise that homeless people have special problems in availing themselves of the services of family practitioners under these arrangements, but I understand from the City and East London family practitioner committee that it has not had any requests for assignment by homeless people.
The hon. Gentleman referred to the report by the City and Hackney community health council, which I have seen. There are matters in it which require longer study by the bodies responsible for services in the area, but it does not seem to me entirely fair for the report to say that the failure of single homeless persons to register is the fault of general practitioners. If the people concerned apply to the family practitioner committee they will be found a doctor, by assignment if necessary. I note that in one of the cases of particular difficulty mentioned in the report a privately run hostel sought help from the district management team, and a sympathetic doctor was found for them.
In part of the report, a person who was apparently refused by a number of doctors is quoted as saying that had he been seriously ill it would have been extremely difficult for him to "shop around" and find a doctor prepared to treat him, but the House will see from what I have just said that this is not the case. If he had needed immediate treatment, any NHS general practitioner in the area would have been obliged to provide it.
I want to say one more thing on this subject. I have a great deal of sympathy with people who find themselves homeless, but one way of helping them is to stress the contribution that they can make to their own well-being. They can apply to go on a list as soon as they arrive in an area, and not wait until they are ill. The doctor is paid partly on the basis of capitation and standing allowances related to the number of people on his list, whether or not they are receiving treatment, and it is only fair to a doctor that people who are living, even temporarily, in his practice area, and who are going to look to him for help when they are ill, should seek to register as soon as they can on arrival.
A forthcoming paper entitled "Primary Medical Care at Hostels for Alcoholics" demonstrates the major contribution that is and can be made to the care of homeless alcoholics by conventional general medical practice. General practitioners were found to visit no less than 97 per cent. of the 104 hostels surveyed, the majority of whose wardens were happy with the quality of service given.
I turn briefly to services at accident and emergency units of hospitals. Although it is true that we are constantly discouraging casual attenders at A and E departments, I am glad to say that in practice staff rarely refuse at least to examine, and often to treat, those who present themselves with minor complaints, particularly where it is clear that the patient has no general practitioner. It must be remembered that London A and E departments have a particularly burdensome problem here, not only because of homeless people but with a large student population and the ever-present holiday visitors.
Of course, the problem is not confined to hospitals with A and E departments. In spite of efforts to discourage the practice, by publicity and information, we are well aware that casual attenders will even present themselves at hospitals which do not provide a service for emergency cases. The department has suggested to hospital staff that in this eventuality, essential first aid should be rendered by such staff as are available, and the patient should either be referred to a general practitioner or to the nearest hospital with A and E facilities. I hope that it is clear from this


that we have a humanitarian policy towards such patients.
The community health council booklet, and the hon. Gentleman just now, commented on the effects of closures of accident and emergency units on health care for the homeless. In the City and Hackney area there are no closures of these units, nor are there any closures of other types of hospital facility which have a particular bearing upon services for the homeless, such as orthopaedic units. Although there are 34 alcoholism treatment units in England and Wales, there are many other areas, such as Hackney, where alcoholics are admitted to psychiatric hospitals, and the psychiatric wards of general hospitals, as part of the total provision of services for alcoholism within the local community.
When closures of hospital departments have to be considered, I have no doubt that health authorities, assisted by community health councils, will have regard for the need to provide alternatives, including alternatives accessible to this group.
The Hackney CHC-CHAR document also raises the problem of proper arrangements when single homeless people are discharged from hospital after treatment. The hon. Gentleman also mentioned that in his speech. We have advised health authorities that the full benefit of hospital treatment may well be lost if arrangements for after-care are

inadequate. Hospital staff are well aware of the importance attached to social as well as medical considerations when arranging for a patient to be discharged from hospital. They have been advised that a patient's "home circumstances" are a key factor in determining what after-care he needs.
One of the functions of hospital social workers is to ensure that people are not discharged to surroundings which will cause the return of or aggravation of their health problems. This is a matter of local knowledge about the day facilities, which I understand voluntary organisations for the homeless are increasingly providing for sick persons.
I shall write to the hon. Gentleman and give him further details of what the Government are doing, particularly about points to which I have been unable to reply. I have welcomed the opportunity given by the hon. Member to lay before the House an indication of what is being done, and what can be done, at a local level to help homeless people to gain access to health services. The way forward lies not in the creation of separate services but in looking at the need to improve entry points to the present services and discharge arrangements so that the existing arrangements of services meet the needs of the homeless.

Question put and agreed to.

Adjourned accordingly at half-past One o'clock.